Using Debit Cards and ATMs Effectively

by Eugene Melchionne, Esq.

May 6, 2008

While a Debit Card looks like a credit card, it uses the funds already on deposit with your bank. So the first requirement to get a debit card is a bank account that can be used with it. When you use that card to make a purchase, you are not incurring any debt rather, the money is deducted directly from your bank deposits. Like a credit card, the use of a debit card carries many responsiblilities.

You have to be very careful in using a debit card. Remember, the money is coming right out of your account and carries no delay between the time of purchase and the time your pay for it. Sounds like cash, doesn’t it? Like cash, you are not building a credit rating on your credit report every time you use it.

However, misuse of a debit card could reault in a report to Chex Systems for abuse of a checking account which could prevent you from opening a new account at another bank. If you use a debit card as an institution like a hotel, you have to be careful as the hotel will place a hold on your account for the potential charges which could result in other debits or checks bouncing from your account for insufficient funds. Finally, if you lose you card or someone steals the access numbers, you could face much larger liability from fraud much the same as if you had lost a signed blank check. However, if you notify your bank within 48 hours of losing the card or discovering the fraudulent charges, your loss could be capped at only $50.00.

An ATM access is the same as a debit card except that you are reaching your bank funds through a machine rather than a plastic card. More and more system require that you use your debit card to access the machine, but that may not be the only way to reach your money. The same precautions apply to ATMs, but also be wary of the fees and charges that go along with their use. Just as with any checking account it is best to find an institution that offers the right terms for you that won’t bleed your account dry with fees and charges.

“ConnecticutGene Melchionne is a bankruptcy lawyer covering the entire State of Connecticut. He can often be found on Google+ and Twitter, where he shares information about consumer protection issues and personal finance.

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Last modified: November 19, 2013