As you all probably know (and have complained about bitterly), Bank of America and a few other select banks will start levying a $5 monthly charge for debit card purchases next year. Now whyyyyyyy would they do that and risk consumer ire???
Greed. Period. Pure greed.
Recently, new legislation was passed to cap swipe fees, money that stores have to pay banks, per transaction, for the privilege of using credit/debit cards in their respective businesses. Interestingly, debit cards fees were capped, but not credit cards… (which I suspect was a compromise to banking interests.) But the damage was done. Because Bank of America apparently has no money anymore, they are going to pass on this loss to… well, us lowly consumers.
I really don’t understand why it’s okay for banks to charge us… to use our own money!!!! $60 a year to access our own funds?!?!???? It’s eeeeeevil, I tell ya.
I do not bank with Bank of America, but as I understand it, Wells Fargo, Suntrust and a few other major banks are considering issuing these fees as well. So I started considering changing banks… perhaps to a more local one or a credit union where customers are actually valued. (Wow. What a concept!) Then, I realized that the only time I use my debit card is to use my bank’s ATM machines… and calmed down a bit. So while I may still switch banks, I’m not in so much of a rush anymore.
I do not use my debit card for purchases. I have my reasons. Here’s why:
1.) Those damn “phantom charges” have killed me in the past.
Ever bought gas with a debit card? Or stayed in a hotel? Many businesses put an undisclosed “hold” on your credit/debit card for a certain amount (for usually more than you’re spending), so that they can ensure that you have enough money in your account when they settle your transaction. For hotels, they may hold hundreds of dollars of your money hostage until you check out… because they want to make sure you pay for your mini-bar fees. And the time they hold these funds is pretty arbitrary to boot; I’ve seen gas stations “phantom charge” my card for up to a week.
Well, one time… I had to pay overdraft fees because my money was not “available at time time;” that is, I had sufficient funds to pay for said purchase, but another institution was holding it for another purchase. I complained bitterly, but my bank did not budge. I promptly closed my account.
Credit cards are safer because you’re not putting your own money upfront… just credit. I don’t even notice the phantom charges because I never even remotely reach my monthly credit limit. (I’m cheap.)
2.) Well, let’s talk about overdrafts some more…
So, to review, if you accidentally spend more than what’s in your bank account, the bank will graciously cover it if you have overdraft protection… and then charge you up the wazoo for the inconvenience. If you don’t… your debit card will be denied. The only harm is that you’ll suffer some embarrassment as you leave your groceries with the check out guy. I’m okay with that.
Incidentally, I do not have this problem with my credit card. I just swipe and go. Transaction done. And if you do reach your credit limit… again, you’re walking away with no groceries. So sad… But, on the upside, nobody will try to charge your broke ass for not having any money either.
3.) And what if you want to dispute a charge?
Thanks to FedEx, I regularly receive damaged goods in the mail, and want to return them. And yes, there are times when unscrupulous and/or idiot merchants overcharge me. In both cases, I want my money back.
The bad news about debit cards is that your funds have ALREADY left your account… so you are left to fight with these businesses who may or may not be so willing to part with said cash.
With credit cards, of course, 1.) you generally have a few weeks before you receive your bill, and you can reconcile your receipts with your statement then; and 2.) if you notice irregularities, you can always dispute the bill… not paying parts of it… until the credit card company researches the offending charge. You don’t even have to deal with the offending store. Just turn it over to the big boys.
4.) Honestly, using your credit card is much safer than debit.
If someone steals your debit card, they can clean out your account before you’re even aware of it. Good luck fighting with your bank for reimbursement!
However, if a bad, bad person heists your credit card, when he/she gets around to using it, often times your credit card issuer will notice it before you will… and you will receive a disconcerting telephone call, allowing you to close/change your account before further damage is done. And as I said above, you always have the right to dispute any fraudulent charges… and it’s then all on the bank to deal with it.
Of course, all of my arguments are predicated on the fact that I pay off my credit card bills in full every month. If you carry a balance, the finance charges credit cards assessed will kill you in the wallet. In that case, a piddly $5 monthly debit card charge doesn’t look so bad…
In the end…