October 5, 2000
Devil in the Details
Why debit cards aren't necessarily a convenience. Review some advisable moves and potential pitfalls.
By Ray Martin

BOSTON (CBS.MW) -- A few weeks ago, my wife opened the mail to find our bank, Fleet Boston, had sent a new card with my name on it. The bank had just been through a merger, so we assumed this was an updated ATM card with its new name.

The marketing material that accompanied the card proclaimed that I was fortunate and that THIS card was more powerful and versatile than any ATM or credit card.

After a closer look, we found the card displayed not only our bank's name, but also the MasterCard logo. It was a debit card. I am not a fan of these transaction cards and I'll tell you why.

The marketing material that accompanied the card proclaimed that I was fortunate and that THIS card was more powerful and versatile than any ATM or credit card. Yeah, right. It also went on to state that if I wanted it, all I had to do was call a toll-free number and it would be activated. We cut up the card and thought we had put this matter behind us.

Several weeks later, while on a business trip, I needed cash and went to an ATM. My ATM card was denied! I tried another ATM. Denied again! I called the bank's customer service center and after 20 minutes on hold, a service representative explained what fate had befallen me.

Cut down in the prime of life The bank discontinued my ATM card because I hadn't called them to activate the debit card they'd sent. The notification apparently was in the fine print on the back of their marketing material. I asked her to reinstate my ATM card so I could get the cash I needed. Her reply: "That's no longer an option, but I will send you a new ATM card and you'll get that in about a week."

She insisted that she had procedures and rules were rules. They had my money and I could not get any of it! I was "Steam comin' out of Popeye's ears" mad! It would have been easier to capitulate and take accept their offer to give up the ATM card and go with the debit card.

Advisable moves
Debit cards do have some redeeming features:

Purchases made with a debit card are automatically deducted from your bank account, avoiding debt and interest charges altogether. It's easier to pay for purchases with a debit card than writing a check. Users get a consolidated list of all purchases and checks on the same bank account statement. There's only one card needed to make purchases and get cash from an ATM.

Safety nets Die-hard debit card users say they prefer debit cards to any other type of bankcards. " Since I made the switch... I'm finally able to control my spending and am now on track to repair and improve my credit history," said Lori Hassell, 27, a broadcast television employee in Virginia.

Some people have the bank set daily transaction limits, and they must call in to authorize a purchase over that amount. Most people that I talked to aren't aware or concerned about the dangers involved with connecting a debit card to the cash in their checking account. Those who are keep only a limited amount of cash in the bank account with the debit card. Some have the bank set daily transaction limits, like $300, and they must call in to authorize a purchase over that amount.

Cause for cautiousness
There are also disadvantages and serious dangers with debit cards:

Unlike fraudulent charges on a credit card, there are no federal regulations protecting you and your account against fraudulent use of your debit card. You must rely on the policies of the bankcard provider to protect you.

Some debit card horror stories include bounced checks and marred credit reports This can happen when a filched debit card number used by crooks drains the account, which is also used to pay other important bills like a mortgage or utilities.

Credit-card holders can get the float on their monthly purchases while keeping their money in an interest-bearing account until they get the bill. They also earn rewards such as air miles for airline tickets. They avoid interest charges by paying off their balance in full. With debit cards, since all purchases are deducted from the account immediately, your money is out of your interest earning account and in the hands of the merchant (less a small fee to the bankcard company) sooner.

Since purchases made with a debit card are immediately deducted from your checking account, you must follow your balance closely to avoid bouncing checks written off the same account.

As for my own predicament, my wife bailed me out and got some cash with her ATM card. I'm still waiting for my ATM card in the mail.