Debit Card Pros and Cons
Spending Limits: Your debit card may allow you to access only a certain amount of money each day. Holds on your account (from a car rental agency or hotel, for example) may block you from getting access to your cash from an ATM.
Convenience: A debit card carrying the MasterCard or Visa logo must be accepted by any merchant that accepts MasterCard or Visa. This is true when it comes to paying for a purchase. In the case of car rental agencies, however, some do not accept debit cards to reserve a cara lesson I learned the hard way when I got to the car rental counter in
No Float: When you pay by debit card, your purchase will be deducted from your account quickly. You won’t have free use of the bank’s money the way you will with a credit card that you pay in full each month.
Issuance: If you have a bank account, you should have no trouble getting a debit card. You may have trouble getting one with off-line purchasing capabilities, however, if your credit or check-writing history is spotty.
Benefits: Though debit card perks are not nearly as common as credit card ones, some issuers offer benefits such as frequent-flier miles and rebates with debit cards.
Dispute Assistance: Debit cards are not included in the Fair Credit Billing Act, which allows you to withhold payment in the case of certain disputes. Your debit card transaction is typically treated the same as a cash or credit purchase, and you have to deal with the merchant directly if there’s a problem with your purchase. That, of course, can become a big problem when the merchant isn’t legit.
Credit History: Debit cards are typically not reported to credit reporting agencies and therefore do not help build a credit rating.
When Your Debit Card Is Lost or Stolen
The biggest problem with debit cards, as compared to credit cards, is exposure in the case of fraud. Debit cards are covered by the federal Electronic Funds Transfer Act. Under that law, if your card is lost or stolen and a thief uses it to go on a spending spree, your liability is $50 (the same as credit cards), but only if you notify the bank within two business days of a problem. If you wait too long, your liability could become unlimited. The good news is that MasterCard and Visa both have policies that protect you from unlimited loss if your debit card carrying one of their logos is used fraudulently.
