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Living in the land of the debit card


After living in a largely cash economy in the Philippines, it is quite a shock to return to the U.S. and pay for everything with a plastic card–and I mean the debit cards, not credit cards.

Debit cards save us from carrying around cash and are less stressful.  Well, I am not sure about less stressful.  Last time we were home, my wife often asked me, debit or credit and she was referring only to the debit card.  I didn’t think there was a difference but now I discover that there are big differences for visa, banks, and the merchants and of course for us!

According to an article by Andrew Martin in the NY Times on Jan 4, merchants pay significantly higher fees when we use our debit cards like credit cards as opposed to when you punch in your pin.   Some merchants don’t even make you sign when you are using your debit card as a credit card. Have not figured that one out yet. But, whether you sign or not, punch in a pin or not, the money is coming directly out of your bank account.  Better to punch in that pin.

But, according to another article by Terry Cettina on readersdigest.com, debit cards are not protected in the same way as are credit cards.  She writes, “Many people wrongly assume that debit cards offer the same protection against fraud as credit cards. But when a debit card is stolen or copied, there’s no grace period while you contest the charges. Your cash has already been electronically zapped from your checking account.”  You may be able to get your money back but apparently it will come from the merchant and not the bank issuing the debit cards.

Not only that, but merchants often place a “hold” on your debit card for a minimum amount–Cettina says often there is a $75 hold on gas transactions which may not be removed for a few days.  Sounds unfair to me–but she said holds are a “common practice in the “travel and hospitality business.”

So, she suggests that you use credit cards when shopping online or eating out.  Or, if you must use your debit card, be sure to key in your pin rather than just swiping your card.

Hope this helps and I welcome any correction or confirmation on these practices.

Maybe I should have bought visa stock when it went public a few years ago! Seems like they have a racket going.

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