A man riding a motorcycle down a street

Debit Cards and Motorcycles Just Aren’t Safe

For decades I’ve pleaded with you to not use debit cards because they are not safe. And for years I warned my sons about the dangers of riding motorcycles because they are not safe.

Has anyone listened and taken heed? Debit cards are more popular than ever. And on the subject of motorcycles in my family, to date I have a 50-percent fail rate. For me, debit cards are the motorcycles of personal finance.

A person riding a motorcycle down a street

Some rights reserved by marnalbano

I’ve concluded that the best I can do now that so many refuse to give up their debit cards (and motorcycles), is to nag, preach and harangue on the importance of crash helmets and safety equipment.

The odds are stacked against you in both debit cards and motorcycle travel. You must know what you are dealing with, how to react and what to do when things turn ugly.

THINK LIKE THE BANK. For you, a debit card is a convenience. For your bank, it’s a huge moneymaker. If you allow your account balance to get too low you could get socked with big bounce fees. If you forgot to track a few small debits and a large check comes through later in the same day, many banks will hold the small debits and honor the large check first and then charge you a $34 bounce fee for each debit transaction that exceeds your balance.

CREATE A CUSHION. If you use a debit card, you cannot afford to let your account run low. Figure out a way to keep a cushion that you never use as your protection against inadvertent bouncing.

KEEP TRACK. The bank will not stop you from using your debit card just because your account runs dry. In fact, they are quite happy when this happens so they can whack you with huge fees. Get online and access at your bank’s website so you can check your balance and account activity every day.

STICK TO CASH. Cash is cool because it is limiting. Cash can’t bounce. I find spending cash keeps me more aware of what I’m doing. Plastic just isn’t the real thing. Retailers love to see you swipe a plastic card for payment because they know you’ll spend more in their store than if you are limited by the cash in your wallet.

DEPOSITS SLOW, DEBITS FAST. Don’t assume you’ll have immediate access today to funds you deposited today. Most banks place a hold on deposits for a few days, others for up to a week. And if your debits come through while the deposit is on hold? Brace yourself. It will be just as if you had never made the deposit.

SPEAK UP. Don’t assume anything. A bank’s policies and guidelines can change overnight, so keep up. And if you get burned by your bank, don’t take it lying down. Speak up. Explain your situation and ask them to waive the fees and penalties. If your bank or credit union isn’t known for its customer-friendly policies, remember there are plenty out there that are.

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  1. Don says:

    I saw a previous article by Mary and cancelled my Debt Card at that time. I use a credit card very sparingly and try to pay with cash or check.

    Reply
  2. Colleen says:

    Because we live in a very rural area, it is difficult to get to a bank/ATM for cash withdrawals (especially an ATM that doesn’t charge horrendous fees), so I do rely heavily on my debit card. However, like others who have already posted, I track every transaction meticulously, never use the debit card for online purchases, keep a substantial cushion and use an overdraft protection feature on my account, and finally, I bank at a small-town credit union that watches out pretty well for their customers. Yet due to today’s article, I would like to try and figure out a cash method instead of using the debit card so much. (Hint: maybe a future DPL Everyday Cheapskate column could give time-and-distance-strapped readers some tips on how to transition to using cash more often? 🙂 Thanks, Mary!

    Reply
  3. momof2 says:

    I somewhat disagree with the article about banks not having instant deposits. I live in a rural state, and we’ve had instant deposits for a few years now. Also, I’ve implemented an option where I cannot continue charging with my debit card, without having money in my bank account to cover those charges. As far as carrying cash you are more likely to be short changed through human error, not to mention the amount of germs passed through the handling of cash. However, I do agree that keeping a cushion in your account is mandatory whether you use debit cards or cash in your daily life. Just like anything, don’t let your credit or debit cards control your impulse to buy things you want, instead focus on your needs.

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  4. DianaB says:

    Wachovia was absolutely famous for holding deposits and running through the bigger debit items before the smaller ones to create overdrafts. I have paid them a boatload in overdraft fees and because of that went to a credit union account. Unless something has changed after they became Wells Fargo, I am sure you have all found out the same thing.

    Reply
  5. Deborah says:

    I use my debit card and plan to continue to do so. I do, however, have a “cushion” of $500 that I never touch and am very glad of that as my bank has now started charging $5 a month if your balance goes below that. I will say that I never use my debit card for online shopping, not because I’d spend more, but because I don’t think that’s a good financial move as it’s tied to my checking account. I am very frugal and spend the same no matter the form of payment, debit or cash. I shop with a list and don’t buy anything that is not on the list. This has not always been the case and I thank Mary for that. In the last year, I have managed to pay down my credit card balance from almost $10,000 to just a little over $2,000 and will have it paid off in the next few months. Thank you, Mary!

    Reply
  6. Maxine Moore says:

    I am rereading this, but it seems to me that none of the warnings here are different than would be made for check writing.

    Reply
  7. ely.summers says:

    I dumped the debit card about a year ago and have gone cash only. Surprisingly I am saving money hand over fist, probably because I am keeping within my budget and tracking every penny.

    Reply
  8. BobbyeBee says:

    I often use a debit card because we travel, and carrying large amounts of cash just doesn’t work. I do check my balance every day, and am meticulous about registering anything I spend in my Quiken. In restaurants, we always use cash (have found a couple places that ATM does not charge any fees) to pay for our meal, and for the tip. I’m not comfortable handing my debit card to a wait person I have never seen before.

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  9. Gwammie says:

    I do use our debit card a lot. We use it at restaurants the most and at other places that won’t accept checks (like WalMart). BUT I am meticulous about my checkbook. I will not sign the receipt at the restaurant or get out of the line at the checkout until the amount is recorded in my checkbook. (Yes, some people get annoyed with me, but so what? It takes seconds to get that number written in there.) Because we bank with a small community bank, they know us well. We did get a call once from them when we appeared to be overdrafted BEFORE the account was charged any fees (turned out that the bank had made an error), and it was nice to know they were looking out for us like that. (Well, not nice to know they made a mistake but at least they owned up to it.) I cringe when people tell me they went online / to the atm / called in to check their balance and “Gee, it was higher than I thought, so I spent it.” You know what the rest of that story is. I don’t spend any more than I would have with cash because I know my limits. And as my father once said, “I raised you to be frugal but you turned out to be downright cheap.”

    Reply
  10. Caren says:

    I have just recently stopped using my debit card and carry checks with me instead which I rarely use but are there for emergencies. I use cash. Yes I agree, I spend less.

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