Credit Cards To Be Fairer

[Planey]

They might be your "freebies" but nothing is really free.

Consider who is really paying for your alleged "free" gifts.

Don't blame President Obama. He is just trying to rectify an injustice.

Graeme

[phkrause]

Good point planey. If one gets something free, its costing someone else. My brother is probably unhappy also. He has a discover card that he uses to get points for lots of different things.

pk

[carolaa]

How would a person make purchases online without a credit card?

[bonnie]

How would a person make purchases online without a credit card?

Pretty simple. Use a debit card like a credit card. Convenient and does not run up debt

[carolaa]

Not as secure, though.

[Dr. Shane]

Paypal is about as secure as one can get. With Paypal one can use a debit card or a checking account. I have purchased a pre-paid debit card and keep a low balance on it. If it does get stolen they can only get as much money as the balance is.

[GreatLakesGramma]

After the discussion I had with my son today, there is not way I'll ever even consider having a debit card. He spent last week visiting his twin brother who lives in another state. His brother works in a bank call center, doing customer service. He said people get in the most trouble with their accounts with debit cards. The reason is that, contrary to statements made here, you CAN overdraw a debit card at most banks.

At most banks, since deposits don't actually appear on the account until the next business day, the system will allow you to debit to your heart's content for at least an entire day, regardless of your balance. But if no deposit shows up on the account the next day to cover all the debits, then you get hit with overdraft charges. And banks always debit the largest transaction first, so if that one overdraws the account, every debit made that day is charged an overdraft fee. And most banks won't even deny further transactions for several days, or even a couple of weeks, though sometimes it's a dollar limit that stops further transactions. Besides this, in some banks there are over-limit fees which can accrue daily until the balance is brought back up.

So if someone manages to access your debit account, they can steal a LOT more from you than just what you have in your account, and you will be liable for all of it, plus overdraft charges, unless your bank is one of the rare exceptions.

A friend of my sons' recently had a debit card nightmare. She was working full time nights, going to school days, and getting very little sleep, so it's not too hard to understand how she happened to forget about an automatic payment deducted from her account. She didn't make any large purchases, but she made many small transactions with her card, since it is more convenient than going to the bank to get cash. Her total overdraft only amounted to $20, but each and every one of those small transactions was hit with a $30 overdraft fee. Then the daily over-limit fees started, until by the time her card quit working 2 weeks later, and she received a letter from the bank informing her of the overdrafts, she already owed the bank over $400. And the daily fees were adding up faster than she could earn money to pay them.

After giving them her entire next paycheck, and still losing ground, she tried to get the bank to give her a break, but they refused to consider any option except her paying the total, which by then was $500, and then they might consider giving her some of it back. Later, she found out that that would have amounted to a "whopping" $14. But her mother, who had accounts with the same bank, went in and threw a huge fit, and finally succeeded in getting the bank to reduce the fees by $300.

[carolaa]

What a nightmare!

[GreatLakesGramma]

It was. She was hysterical when she called my son and told him about it, when she first found out.

[Dr. Shane]

Quote:

After the discussion I had with my son today, there is not way I'll ever even consider having a debit card.

Debit cards are good. If a person is concerned about theft of their debit card they should get a pre-paid debit card and keep a low balance on the account.

Quote:

At most banks, since deposits don't actually appear on the account until the next business day, the system will allow you to debit to your heart's content for at least an entire day...

This is also true for writing checks. Everyone should know the rules of their bank and know when their deposits are posted to their account. No one should be writing checks or using a debit card until funds from their deposits have been posted to their account. That is just a bit of common sense.

Quote:

So if someone manages to access your debit account, they can steal a LOT more from you than just what you have in your account, and you will be liable for all of it, plus overdraft charges, unless your bank is one of the rare exceptions.

It is the same as a checking account. I have had my check book stolen twice and on neither occasion was I held liable for anything. Once the thief did get my debit card and stole a lot with it. I did have to fill out a police report and it did take several weeks to get straight with my bank.

Quote:

it's not too hard to understand how she happened to forget about an automatic payment deducted from her account. She didn't make any large purchases, but she made many small transactions with her card, since it is more convenient than going to the bank to get cash.

A number of issues here.

1. She forgot about an automatic withdrawal because she was not on a written budget.

2. She was making purchases with her debit card that she should have been using cash for.

3. If she was living on the cash-envelope system she would never have to go to the bank for cash. She would get all the cash she needs when she cashes her check. She would divide it into various envelopes and live on that until her next pay check.

Her problems were not because of a debit card. Her problems were because she doesn't have her financial house in order. Been there - done that. I know what stupid is because I seen him in the mirror a lot.

[Woody]

Quote:

There are two subjects that I have asked not to be in townhall. Politics and religion, am tired of moving them. Locked some today will just delete in the future.

_________________________

Stan

The world headquarters for the

www.adventistsecretservice.com

has been relocated to

www.adventistan.com

[GreatLakesGramma]

Redwood, this is not a discussion of politics or religion.

[Woody]

Why is the legislation that Obama proposed and signed into law ... not considered politics? I may be ignorant ... but perhaps I need a definition of 'politics'.

[GreatLakesGramma]

Shane, I just realized you are not talking about debit cards associated with one's checking account. That is the only kind I have been aware of in recent years, except for the gift cards you can buy at K Mart and other stores, which you can only use there. Do you get your pre-paid debit card from somewhere other than a bank? If so, where?

[GreatLakesGramma]

Redwood, the discussion is about credit cards, not politics. It has some political connections, but that doesn't make it a political topic.

[Woody]

I appreciate your idea. But then there are lots of ideas. If we are going to have rules .... we need to have them spelled out by the one imposing them.

To say that legislation that Obama pushed on us is not politics .... I for one just don't understand. I happen to believe it was ALL about politics. I see NO other topic it could possibly be under. But like I said ... I may be totally ignorant of what the one imposing the rules feels is politics.

I feel totally inadaquate to determine what is politics and what it not. I personally think it will come down to ones politics to determine what is politics and what is not. The politics of the one imposing the rule.

[GreatLakesGramma]

1. She forgot about an automatic withdrawal because she was not on a written budget.

Having a written budget is no guarantee of remembering an automatic withdrawal. I have a written budget, and all of our regular bills are on automatic payment. Most of them send an email telling us ahead of time that it is coming up. For some reason our mortgage company doesn't. They only send statements quarterly, even though they withdraw monthly. The first time after I put it on automatic payment that I didn't get a statement from them, I didn't subtract it from my check register until I saw it posted to our checking account online. Any time I am stressed and overwhelmed, it is very likely to happen again, though it won't be a problem for us as it was for her.

[Dr. Shane]

Quote:

Having a written budget is no guarantee of remembering an automatic withdrawal.

Quite to the contrary. A written budget is a guarantee of remembering because it is written down. This is how a written budget works.

BEFORE getting paid one makes a written budget. THE SAME budget is used from month to month. Minor adjustments are made due to changing circumstances and needs. Written budgets are normally made the month prior to the budget. So June's budget is made in May. May's budget is going to be the guide for June. The first thing that goes in the budget are fixed expenses: rent, mortgage, monthly bills, automatic bank withdrawals, etc. When a person gets paid they simply pull out the written budget, pay the bills and allocate the money as per the budget. The envelope or coffee can system works well. Each envelope or coffee can is labeled for cash purchases: food, entertainment, gasoline, clothing, misc, etc. Pay day becomes simply a household finance administration day. It is the day we execute the written budget. Those living on a written budget will not ever forget an automatic withdrawal.

[Dr. Shane]

Do you get your pre-paid debit card from somewhere other than a bank? If so, where?

Pre-paid debit cards are available at a host of locations. Wal-Mart is perhaps the retailer with the most locations. A Texas grocery chain H-E-B has them. I have seen them in many convenience stores too. However they do charge a fee since they have to make money somehow. Our pre-paid debit card charges $1/transaction. That can get to be expensive if a person uses it for many transactions. We only use ours for a few transactions per month. Our automatic payments are taken off from our debit card. That way no one has electronic access to our checking account. We also use it to purchase things on the internet on sites where we cannot use PayPal.

[GreatLakesGramma]

I guess it depends on your definition of forgetting an automatic withdrawal. To me, forgetting to enter it in the check register is forgetting the withdrawal. It appears that to you it means forgetting to set aside the money. In that case, I do agree. The reason it isn't ever going to be a problem for us, whether I forget to enter the transaction beforehand or not, is because the money will always be there anyway.