Consumer Debit Card Use Getting Expensive

If you have had a debit card for any length of time, you know the benefit and ease of use that they offer.  They are just like writing a check, but without the check.  And, they are processed as either a debit transaction with your PIN or as a credit card.  In short, they seem to offer the best of checking and credit benefits except that there are some pitfalls that are tripping up consumers.

Overdrafts and Fees
Banks are used to charging overdraft fees (also called Non-Sufficient Funds – NSF fees), they have been doing it for years.  But what is particularly bothersome about this is that the overdraft fees are very expensive.  In fact, they usually top $30.00.  Then, in addition to that retailers add on their own fees which can be as much as $25.00.  Also, a common practice is to try to re-submit the charge again by the retailer.  That results in another fee.  You can have charges of around $100 real quick in this scenario.

Also, banks have begun to offer automatic overdraft protection.  But what this does is prevents them from just rejecting the transaction, and instead allowing it so that they can charge the fees.

Lining Bank’s Coffers
This practice by banks has them raking in more in overdraft fees than they collect on credit card fees.  It has become a big profit center for them and there is nothing that you can do about it.  Most banks will not renegotiate these fees down.  They stand behind their written policies while you drown in a sea of charges that straps you financially.

Security Concerns
Another concern for debit card use is the inherent security risks involved.  This is because debit cards do not have the security protections that credit cards provide.  If you have unauthorized charges on your debit card, then you are out that money unless you can discover who used your card and retrieve the money through legal means.  And the chances of that happening are slim to none.

Consumers are using debit cards more frequently than credit cards these days, so the need to understand the risks and then avoid them is real and necessary.
The federal government is looking at enacting legislation that protects against the usurious nature of the banks practices.  Until then, it is more than likely that you will experience an event such as these on your accounts.  At least knowing the risks should help you be more vigilant with your accounts.

• Some more Visa debit card questions and answers
• Why Debit Cards Are Better Than Credit Cards
• Reclaim Bank & Credit Card Charges
• Sneaky Bank Fees to Watch Out For
• Use of Debit Cards Can Be Expensive