Tue
Jun 27 2017
06:51 am

I don't know. People these days are using debit cards way too much. I can understand the attraction, especially if you have an aversion to credit cards. However, if somehow your debit card account gets used fraudulently, you are out of money for at least a little while.

Yesterday, I was next to a person on the phone with their financial institution trying to figure out how to get their money back after their bank account was drained by someone who had obtained access to their funds. At the end of the call the person, speaking to someone with them, explained they were temporarily broke. There was no money in their bank account. The financial institution said they should have the money credited back to their account within a couple of days. What are they to do in the interim? Do they have gas to get to work? Do they have food to eat? Can they pay their bills?

As I have posted in the past, it is not a good idea to use your debit card for anything except a bank ATM. If you use a debit card, your personal cash is affected by provider mistakes. If at all possible, use a credit card or hit the ATM for cash to avoid these temporary cash flow problems.

What is an alternative method to make purchases for those that like to use their debit cards for everything and do not want a credit card liability?

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trobinson's picture

amex

I use my American Express card for everything now. I pay it off every month. Have online access to the account. It's secure. Get a detailed breakdown of my purchases for the year. And it only costs the equivalent of 45 minutes of my billable time once a year. Oh, and I get a free cross country flight every few years. From time to time businesses won't take it but not much anymore.

My wife's debit card number has been stolen twice now.

R. Neal's picture

The alternative is to use a

The alternative is to use a credit card, deduct the amount of each purchase from your checkbook balance, and pay off the bill every month.

Edit: what Trobinson said while I was typing.

trobinson's picture

?

what is this checkbook you speak of...

Rachel's picture

I don't even know my debit

I don't even know my debit card #. I use cash or checks locally, and my credit card for online or big ticket items.

I get dirty looks at the grocery, but honestly, I can write a check in the same amount of time it takes to run a debit card. Sometimes faster, since I fill in all but the amount while I'm standing in line.

And it's not because I'm an old fogey. I'm the least technology adverse person in the world.

Somebody's picture

There are probably fees

There are probably fees involved, but you can get prepaid credit cards if you don't trust yourself with regular credit cards.

You can also just open a separate bank account tied to a bank debit card, and limit what you put in that account, so you won't be cleaned out if it's cleaned out.

Tamara Shepherd's picture

*

I recall that I respectfully disagreed on this subject before, but if someone did find his debit card had been used fraudulently and he could not survive the 48 hours it would take his bank to refund his money because he had no overdraft protection on his checking account, had no cash stashed anywhere at home (or in any other account?), had no food at home (even in a can?), had no gasoline at home (for a mower, maybe?), and had allowed his bills to accumulate rather than paying them as they arrive...why couldn't he just use that credit card to survive those harrowing 48 hours? Shoot, he could even get a cash advance on it, I'd think.

But it is precisely the person I describe above (and that you described in your initial post)--the clearly disorganized and/or irresponsible person for whom 48 hours without a debit card would pose a crisis--whom it seems to me is the last person who should be using a credit card all day, every day, with the intention of paying it off at the end of the month.

I'm a person of modest means, I think everyone here knows, so my observation is only that using a credit card does not somehow preclude the need for adults to handle their personal finances with enough organization and responsibility that 48 hours without a debit card doesn't pose any crisis.

bizgrrl's picture

I agree that a credit card is

I agree that a credit card is not the answer. I know there are some people who can't handle credit cards and know it. Good for them. It just seems they should also recognize the limitations of using a debit card for all purchases.

As Rachel said, checks can still be written. Some large chain stores (grocery stores) have a way to fill out the check for you and you just sign it. As for gas, etc., hit the ATM and pay cash. Get a pre-paid credit card if the cost isn't too high.

We've had to replace a credit card 3-4 times due to fraud, primarily from retail or gas purchases. Most recently, in 2017, it was a snack purchase at a convenience store. Prior to that it was gas purchases. The credit card company usually catches it before we do, puts a stop on the card. We notice it next time we try to use it. I can't imagine this happening to my checking account and savings account if it is linked to cover overdrafts.

Tamara Shepherd's picture

*

Now, I do think my 21 year-old son would suffer a crisis if he had no debit card for 48 hours.

Shortly after he moved out last summer, he returned the first aid kit, the sewing kit, and a small stash of jar candles, flashlights, batteries, and matches I'd packed up for him. Said he didn't need them.

I made him take them all back to his apartment and he's used all those items since then. He's coming along...but I wouldn't advise him to use any credit card daily and pay it off at month's end :-)

trobinson's picture

!

wow

Tamara Shepherd's picture

*

"Wow" is right. That's some inordinate bad luck!

You say the credit card company usually catches it before you do? So you mean someone stole the card number, not the card (which you would presumably notice was missing)?

I haven't used a credit card in so many years, I don't really understand how this can happen. Gas purchases are almost exclusively "pay at the pump" these days and retailers of other sorts ask us to just swipe/insert our cards, right? And after our purchases, retailers have only their copy of a receipt with the last four digits of the card number, unlike that carbon copy of the card's face itself that they retained in days of yore?

Whether using debit or credit cards, I've imagined that clerks at a cash register no longer know our card numbers, given today's technology. Were these thefts of your card number then the result of some back office hoodlum accessing your information electronically, in ways the clerk at the front counter could not?

(I hope my questions don't require you to type umpteen paragraphs in answer, but I don't understand!)

mjw's picture

Techie stuff

Tamara, most credit (or debit) card numbers that are stolen at the point of sale are stolen via three basic methods: a software hack of the POS device itself, a hack of the network used to transmit the charge, or a hardware skimmer attached to the POS device itself (this is most common at ATMs).

The problem, of course, is that while the printed out receipt no longer has the card number on it, the card number does have to be known to the POS device, the network it connects to, and the bank clearinghouse it transmits the charge to. I say that, but it really is no longer true.

If you are using the new chipped cards at a POS device that can actually read the chip, your credit card number is no longer read by the POS device. Instead a "one-time charge" number is generated, and that is the number that is transmitted to the "bank". If possible, use a chipped card at vendors that can use the chip, rather than a vendor that is still using the mag-stripe.

These days, credit card numbers are far more likely to be stolen from a ecommerce site that doesn't properly encrypt your card number or that uses an easily breakable two-way cypher. To avoid this, you should limit the number of online sites that have your real credit (or debit) card number. I use a Paypal when I can and a one-time number generated by my Citi card web site for other one-off purchases.

bizgrrl's picture

The first two times it

The first two times it happened to us were 5+ years ago, before credit cards with chips.

Once was in North Carolina when we went to visit the elks. We're pretty sure it happened at a convenience store/gas station near there. Yes, it was probably where we paid at the pump and the info was grabbed somehow.

The second time we were on a road trip in New England. We have a credit card that we just use for gas and internet. We went to pay for gas and we were rejected. We called the credit card company and they told us they cut us off because they thought we had been hacked. We found out there were 3-4 or more charges on our card totaling over $1,000 that were not done by us. The credit card company somehow noticed we had charges in New England but there was a train charge for the west coast, among some other charges including porn. Luckily we had another credit card to finish the trip.

Then there was the time we got hacked after using the card at a local Alcoa convenience store (not a name brand), not gas, purchased inside the store. I think the credit card company called us but we may have noticed that one on the bill.

About 3-4 months ago we got a call from the credit card company telling us they think we were hacked again. At that time I believe we had been doing a few online purchases, I could be wrong. The credit card company noticed a charge again for some sort or porn/dating site. Those charges were fairly low.

None of these incidents happened at a store using the chip reader.

In every instance the credit card company handled everything and we never lost any cash.

Tamara Shepherd's picture

*

In the decades I've used my debit card, I've never lost it and had it stolen only once. Used it at Walmart on Clinton Highway, but after completing my purchase stood at the checkout a moment longer to fumble with something in my purse, then walked off leaving the card on the counter. Someone in line behind me scooped it up and used it at Kroger on Clinton Highway and at two other eateries nearby, seems like.

Anyway, I discovered my card missing (and spotted the three fraudulent charges online) within hours, and reported the card stolen. My bank, ORNL Federal Credit Union, refunded those three charges in a couple of days (or less?), charged me not a dime, and also issued me a temporary debit card directly from a branch office on the spot. I recall them explaining that every branch can't produce such a card on the spot, but some can, so they sent me a couple of miles away to a branch that could do this.

The incident really posed no particular costs or inconvenience to me, beyond my needing to show up in person at two nearby bank branches.

Tamara Shepherd's picture

*

Thanks, mjw. The processes you explain match the vague understanding I brought to this question. I didn't understand that my debit card with a chip no longer communicated my card number directly to the POS device, but of course I realized that (somehow) my card number was still being made available to the network used by the retailer to obtain my payment. You seem to confirm, too, my understanding that retailers' cashiers aren't likely the culprits in fraud of this sort, but rather hackers (I called them "back office hoodlums") accessing data at some point beyond the POS.

And thanks, Biz, for taking the time to share that backstory on how/when this happened to you guys. It could be my luck's been better because I travel so little (?) and particularly because I've very seldom used my card for online purchases. In fact, I've bought online only from Amazon a few times, to obtain textbooks or novels the kids needed in high school AP classes and later in college.

So possibly my advantage is that I generally leave my house only to procure food (at area grocers, not at restaurants). It is fitting that providence should reward me this way for living so small, huh?!

mjw's picture

Online purchases

Amazon has my number (in more ways than one :-) ), and I don't really worry about it (too much). They have some of the best in the business working for them. But using Paypal saved me from the great Home Depot data breach (also paying cash at Target stores). I've been lucky, so far I've made it thru without ever having a card number stolen, at least by anyone who's ever used it. I've even gotten my card back unscathed the couple of times I've forgotten it somewhere. Which is not to say I don't have other data floating around the dark web. But let's not go there.

I also don't use a debit card because the fraud and theft protections are just not as robust as the ones for credit cards. I've been paying off my charges every month since I got my first Sears card at the age of 21 (it can be done at that age!), so credit and cash are my preferred options.

bizgrrl's picture

Skimming at the gas pump on

Skimming at the gas pump on the rise in Florida.

So far in 2017 285 devices have been detected on gas pumps. In 2016, 219 were found.

It would appear it happens more often in tourist destinations. Could it be a problem in Gatlinburg?

The public can help protect themselves from skimmers by using cash or credit cards — not debit — at gas stations, making sure the cabinet underneath the pump is securely closed and checking that the machine’s security tape is intact.

They should also avoid pumps on the station’s outskirts, which Putnam said more often have skimmers.

ATM customers should pull on the card reader and receipt dispenser to make sure they’re real, Tejada-Monforte said.

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