Hidden Debit Card Fees May Surprise You
Transaction Fees Range From 10 Cents To $1.50
POSTED: Tuesday, July 6, 2004
UPDATED: 5:28 pm EDT July 6,
2004
Debit card use is growing in America, with more and more consumers are swiping their debit card instead of writing out a check.Many of those consumers are discovering -- the hard way -- that their banks charge a transaction fee every time a debit card is used.That's because, unlike ATMs, where customers are warned of a transaction fee, there is no such notice when using a debit card.Pricey PlasticDebit card fees have been around a long time, but they used to be rare.Now they are much more common.A recent survey of banks in the state of New York found that 89 percent charge a debit card transaction fee that ranges from 10 cents to $1.50.Here's the catch: a fee is assessed only if you treat the purchase as a debit and use your PIN to authorize the transaction.Banks don't charge a fee if consumers use a debit card like a credit card and sign their name.Consumer advocacy groups, including the Public Interest Research Group (PIRG), also warn that debit cards carry much more risk for fraud than old-fashioned ATM cards or even credit cards.ATM cards can only be used with a PIN, while a debit card can be used with a signature, just like a credit card.If a debit card is used fraudulently, a thief could potentially drain an entire checking account.It could take the bank 10 days or more to investigate and refund that money.In the meantime, checks could be bounced to landlords, credit card companies or mortgage companies.Legally, debit card liability could be as much as $500, if customers notify the bank more than 48 hours after they learn of the problem.What Can Consumers Do To Lower Debit Card Risk?If you don't want a debit card, demand a plain old ATM card from your bank.If you do want the convenience of a debit card, here's how PIRG suggests you lower your risks:
For More Information: U.S. PIRG Debit Card Fact Sheet
- Never use a risky debit card on the Internet. Only use a credit card for Internet transactions. In addition to greater legal liability protection with a credit card, you have greater legal protection if goods are defective or don't arrive.
- Use a debit card only with merchants you trust. It is also a good idea never to let it leave your sight-- it's one thing to watch a clerk swipe it right in front of you at the cash register and hand it back to you. It's another story when you hand it off to a potentially unscrupulous waiter or waitress who could have an illegal card "skimmer" (the size of a pack of cards) in their pocket and copy your information after they walk away with it.
- Just as you wouldn't use it on the Internet, don't use it to call infomercial phone numbers off the television. If you have a dispute over double-billing or products that don't arrive from an info-merchant, remember -- you'll be fighting to get your own money back, and that could take 10 days or more of arguing with your bank.
- Complain to Congress! Urge Congress to enact legislation to change the Electronic Funds Transfer Act law so that debit card liability is legally the same as credit card liability. Not surprisingly, the banks oppose it. No matter what card you use, you should be equally protected.
For More Information: U.S. PIRG Debit Card Fact Sheet Distributed by Internet Broadcasting. This material may not be published, broadcast, rewritten or redistributed.
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