Risks Associated with Debit Cards
Debit cards are becoming one of the most widely used methods of sending money worldwide. Last year alone, Americans swiped their debit cards over 30 billion times, spending an average of $41 on each transaction.
Considering that about 80% of the rest of the world has used a credit or debit card at one point or another, the number of transactions happening each day with debit cards is astoundingly high, and only getting higher each year. Debit cards are popular methods of sending money because it’s fast and easy on both ends of the transaction. But there are some risks that debit card users need to be aware of.
One of the biggest complaints you’ll hear from debit card users regards security hold. More of a nuisance than anything else, a security hold is essentially a merchant reaching into your checking account and freezing some available funds to make sure you can cover the cost of your transaction.
Hotels, car rental companies, and even gas stations are famous for using security holds. Many businesses look at debit cards as being more risky than credit cards, so they see holds as a necessity, regardless of how annoying the holds can be to consumers.
With time, the holds are lifted, making available funds truly available again, but the timing for the customer is not always convenient. One way around this is to use the card to access cash at ATM machines and pay cash instead of swiping your debit card.
Another complaint sometimes heard from debit card holders is that there is a lower level of fraud protection than with credit cards. With a debit card, if a thief gains access to your checking account, that money is gone, sometimes without a trail. This can be frustrating on many levels, as many consumers make regular payments out of their checking accounts for things like mortgages and auto payments.
If your account is accessed and emptied by a thief, you could rack up late charges and overdraft charges that banks will not always cover. Building habits that protect your personal information from being accessed illegally is one way to avoid this potentially damaging problem.
In addition to these risks, some debit cardholders complain that there are some merchants that don’t accept debit cards at all. Car rental agencies, for one, are notorious for only accepting credit cards. There are a variety of reasons for this, but it’s always a good idea to carry a credit card while traveling and to have access to a line of credit in case of an emergency. Debit cards are an outstanding tool for making financial transactions easy, but they shouldn’t be the only card in your wallet.
As long as debit cards are used appropriately, they will continue to be a convenient and easy way to send money worldwide. Using debit cards to send money can save a great deal of time and money compared to other available methods and will make accessing funds simple for the person receiving your transfer.
No comments yet.