Monday, November 19, 2007


Forget what the title of the remake of “Thunderball” [aside – a rare, if not the only, occasion where the star, Sean Connery, plays the same main character, James Bond, in both the original and the remake] tells you – there are times when you can, and should, say NEVER.

For example:

NEVER, NEVER, NEVER use a debit card to make an online purchase!

A debit card allows you access to the available cash in your checking account to make a purchase. A credit card allows you to borrow money, often at usurious interest rates, to make purchases. With a debit card you cannot spend more than you have.

Several years ago I cut up my credit cards to avoid falling deep into debt at the above mentioned usurious interest rates. I vowed to only use my debit cards, one for my business checking account and one for my personal checking account. I soon learned that there is an important difference between debit and credit cards, and now I use both.

In the past, whenever I had a problem with a credit card charge I would notify the card provider and on my say-so the charge would be automatically removed from my account. On the other side of the aisle, I have heard horror stories from business clients regarding credit card payments for their goods and services.

A client who provided escorted rail travel told me about one of his customers who charged a trip to her credit card. The customer went on the trip and received everything promised in the trip itinerary. However, for some reason the customer did not enjoy the trip as much as expected and told her credit card company to reverse the charge for the fee, which it did. My client was out his fee for the trip after laying out all the costs of travel and accommodations for the unhappy customer. He had to fight long and hard with the credit card company to get his money back.

When I had a problem with a debit card charge a while ago my bank was not as accommodating as the credit card providers had been. It would not automatically remove the debit to my account. I was told I had to resolve the matter with the vendor, and eventually had to sign all kinds of forms to get restitution. I had to fight long and hard with the bank to get my money back.

In the case of a credit card charge the customer receives the benefit of the doubt and the merchant or vendor must prove that the charge was valid, as it should be. With a debit card charge the merchant or vendor receives the benefit of the doubt and the bank customer who was cheated or shorted must prove the charge was invalid.

As the website points out in an article on debit vs credit cards, "It is much easier to dispute a charge on a credit card than on a debit card. A credit card issuer will remove the charge until a resolution is made, but a debit card charge will not be removed without dealing directly with the merchant."

The reason for the different treatment is because credit card charges are covered under federal and state consumer protection laws, while debit card charges, like ATM activity, are covered under banking laws that pertain to the electronic transfer of funds.

A debit card, which is basically a cash card, should only be used in places where you would normally pay in cash - at restaurants, local supermarkets, stores and theatres, and hotels and motels - instances where you are actually receiving the product or service "in hand" at the point of purchase. A credit card should be used in all cases when you are making a payment in advance, both online and offline, for products or services to be delivered in the future. This way if the product or service is not received as promised it will be much easier to get your money back.

So now, when should you use your debit card to make an online purchase?


Another never - NEVER order printed checks from your bank. You will generally pay through the nose (sounds painful). There are many online and mail order options for check printing that will save you more than 50%!

Click on the “Need Checks” ad in the left hand margin of this blog for a wide selection of checks at great savings over what your bank would charge you.


No comments: