Debit Cards Can Bite!

A lot of us are down right un-American because we refuse to carry credit card debt! For us, the invention of the debit card which takes funds directly and immediately out of our checking account seemed like a good idea and a prudent way to make purchases that required a credit card. While debit cards may be great at places that can “swipe” the card, they may not be such a good thing for internet purchases. Here's why:

Most internet merchants accept credit cards, but because you can't be present to physically present the card, the merchant uses added measures to help protect both you and themselves from unauthorized use of your card. Most require that you enter your billing address in addition to your shipping address. Even if you get your statements on line, you have an address on file with your debit card bank--that is your billing address. If it is different than your shipping address (a P. O. box instead of your home address, for instance) it's sometimes easy to forget that fact and you type in the same address for both billing and shipping. Or you could transpose a number, or get the zip code wrong--at any rate, it isn't hard to enter some little piece of info wrong.

If you do, two things happen, and neither of them is good. First, your order gets rejected because of the billing address miss-match between what you entered and what is on file with your bank. This happens a lot more often than you might think. With a credit card, the transaction is halted right there, and nothing more happens until you correct the error. However, if you used a debit card, the second thing that happens is your bank puts a "hold" on the amount of your intended purchase.

The amount of time they "hold" it varies from bank to bank, but it can be anywhere from 24 hours to two weeks. You still "have" the money, but you can't use it until your bank releases it. In this case, the merchant really can't help you. He probably doesn't know you've tried to order, because the order did not go through, so it's not on his computer. He does not have your money, he does not have any control over that money, and he can't call your bank for you. It is between you and your bank. The strange thing is, if you look at your on line bank statement, it will probably say something like "Captain's Coffee $xxx Pending"—which makes it look like we have your money, but we don't. Not sure why it's done that way but it is.

Now let's say you realize you made an error, or just simply think the computer made a mistake (they almost never do), so you try your order again, but again get something a little wrong. The same thing happens again. Order rejected, hold on funds--that is, hold on funds in ADDITION to the money held the first time you tried. If you try again, the same thing. If you were trying to order a Gene Cafe, then very quickly you could have $1,000 to $1,500 on "hold", and no roaster. The merchant isn't going to send out merchandise unless he gets a legitimate order that is confirmed by his credit card processing agency, you look at your statement and think the merchant has tied up your checking account, and all the while, the problem is with your bank, but that is not apparent unless you know how it works or you dig pretty deep. So you are mad at the merchant and think he's trying to steal your money, the merchant is thinking you are trying to defraud him, and neither of you has control of your money at this point. Bad, bad, bad.

So what are we trying to say? Basically at places where you physically present a debit card they are great. You don't have the possible errors you do on a manually typed internet order. Regular credit cards don't post the charge to your account until the sale goes through, so if there is a mistake, you get to try again without penalty. Not so with debit cards. Go ahead and use them for on line purchases if you wish, just be very, very careful. Make sure you get your info right the first time, or those cards can take a really nasty bite out of your available checking balance--even if just for a few days.

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