Perils of using a debit card


1st February: A debit card needs to be used with caution keeping in view certain dangers involved in doing so.

Although, a debit card is a good means for indulging in shopping even though you don’t have cash in hand, but, its use can sometimes lead to many pitfalls. Let us consider some of the dangers involved in using debit cards—

• Delayed reimbursements—One of the things to be kept in mind by consumers using debit cards is that in case of any fraud involving a debit card, the consumer will have his money deducted from his account but will not get reimbursements for a longer period of time.

This means losing access to your funds for a couple of weeks together or even longer. But, in case of credit card misuse, you will not have to pay the charges out of your account.

• Limited loss coverage—The government provides a limited loss coverage to the affected consumer in case of fraud involving a debit card similar to the credit card to the extent of $50. But, an important point to be kept in mind is that such loss coverage will be provided only if the consumer contacts the financial institute within a period of two days after the theft has been discovered.

• Exorbitant charges—As compared to usage of a credit card, the debit card use involves higher charges. For instance, when any consumer uses his credit card at any hotel, his credit card will be charged only after the consumer has checked out of the hotel.

But, if he is using a debit card, the hotel will hold funds greater than what has been actually used by the consumer. This includes the actual amount of the hotel stay along with a rough sum for any incidentals like hotel meals etc.

• Increased overdraft charges—Using a debit card involves another peril, that is, higher overdraft charges. There has been a significant increase in the overdraft charges in case of debit cards in the recent years.

• Skimming tactics—Skimming machines are being used more often for reading the card information and charging money of the debit card users. So, the bank account gets drained of the funds as soon as your debit card has become a victim of a skimming machine.