Everyday Cheapskate: Debit Cards are the Motorcycles of Personal Finance
For decades, I've pleaded with my readers not to 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% fail rate. For me, debit cards are the motorcycles of personal finance.
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.
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 access at your bank's website so you can check your balance and account activity every day.