Business and Finance

Archive for the ‘Debit Card Protection’ Category

Let me take you on a short (I promise!) guided tour of the history of the banking industry. I promise that this short tour will be worth your time, since at the end of the it you could save hundreds of dollars a year in overdraft fees.

Banking in Old Europe

The lending and borrowing of money has been in practice for at least a few millennia – probably ever since money was invented. However, banking really started taking its present form in the old coffeehouses of London, England a few hundred years ago. People would meet there to lend each other money.

Soon, official banks were formed. The basic principle was simple: an average citizen would deposit his money into the bank and the bank would keep it safe for that person – and even pay them a bit of interest t boot. Not a bad deal, and better than keeping one’s money under the straw mattress at home.

Modern Banking

Fast forward to the 1970′s in North America. Competition in the personal banking space became fiercer than ever. At that time, marketing and advertising started to play a more powerful role in how banks made decisions The marketing departments started thinking of a ton of new banking products that they could use to lure customers away from other banks and through their own doors.

Over the next few decades, this type of thinking spawned a whole slew of new banking products and services, including for example: the ATM machine, the debit card, free checking and overdraft protection programs.

The Coming of Overdraft Protection

Most of these inventions offer bank customers greater convenience and even a better quality of life than before they came along. The possible exception among them is overdraft protection, which has proven to be more of a mixed bag for customers.

You see, overdraft protection delivers exactly on what its name promises: it does indeed protect people from having their debit card transactions, checks, and credit card transactions from being rejected due to insufficient funds. However, it does NOT protect people from paying super-high bank fees. In fact, it excels at doing this!

For, as you know, every time your bank covers your overdraft for you they charge you a hefty fee for doing so. In fact, this large fee repays the bank for the potential “loss” of the micro-loan they extended to you (to cover the negative balance) hundreds of times over in most cases. It is for this reason that many people believe that overdraft protection programs do not really benefit the customer at all.

The Big Switch to No-Overdraft Fees Banks

Back to our mini history of banking: nowadays, there is a big shift away from overdraft protection. Even the U.S. Congress is trying to step in on behalf of the average bank customer to try to get banks to relax their strict overdraft fee policies. But, bottom line is that the only way to really avoid overdraft fees altogether is to switch to a no-overdraft fee bank.

3 Ways to Switch

1. Ask a friend for their recommendation of a no-overdraft fee bank that they like and use. (This is easy to do but may be embarrassing for some people).

2. Check your Sunday paper for an ad for this type of bank. (Newspaper ads can show a lot of detail about the offering).

3. Do an online search for a no-overdraft bank. (This option is great because it is easy to find a lot of banks in one place and then compare them).

No matter how you decide to switch, just do it soon. The faster you switch, the faster you will become a part of the latest wave of banking history as you become the customer of a no-overdraft fee bank.

Every major U.S. credit card company with the exception of one charges a two to three percent foreign transaction fee when you use your credit card abroad. Until recently, many credit card companies did not clearly disclose these fees in their terms and conditions. Consequently, many people received a notice of a class action lawsuit settlement in regards to these fees earlier this year. Now that the lawsuit has been settled, credit card companies are required to clearly state foreign and international transaction charges on credit card applications. Here, we will look at ways to minimize and avoid these fees.

First, if you do not know how much your current credit card company charges for international transactions, contact customer service to find out. The vast majority will inform you that this fee is three percent. With the US dollar sagging, paying an extra three percent on every purchase can really hurt the wallet. Fortunately, there are a few ways to avoid these charges.

If you have cash available, using a debit card eliminates this fee. Most banks do not tack on a transaction fee for ATM withdrawals. Plus, the foreign currency rate you’ll get from your bank is often significantly better than what you would get at a foreign currency exchange booth. Again, exchange rates and potential fees vary from bank to bank, so it is important to call ahead.

While ATM withdrawals are generally free of foreign transaction charges, using your debit card as a credit card comes with some risks. First, a credit card provides much better fraud protection than a debit card. If, for example, an unscrupulous merchant overcharged or fraudulently used your credit card, you can easily contest the charges and get a refund. If, on the other hand, you debit card was fraudulently used, you will not only be faced with a depleted bank account, but it often takes a great deal longer to get your money returned. For this reason, using a debit card to make purchases abroad can prove risky.

Ultimately, the only way to pay no international transaction fees is to use a credit card doesn’t charge these fees. By using a no fee credit card, you get the security a credit card provides without the annoying added expenses.

Do you have a credit card?

Have you purchase something online?

Do you verify your identity using your Social Security Number?

If your answer to these questions is a one big YES, it only means that you should be on the look-out for people stealing your identity. Or what is called Identity Theft

Identity theft occurs when someone uses your personally identifying information, like your name, Social Security number, or credit card number, without your permission, to commit fraud or other crimes.

It is an endless process of categorizing the possibilities of having your identity stolen. Do take note that Identity Thieves strive on your personal information. This information is not stolen with out you revealing to the public. Information like your PIN code, email address, password, credit or debit card number and any sensitive data can easily be stolen. These can be retrieved from documents like billing statements. Such documents should be shredded so that no one can just look into your garbage to get your information. Also be careful in encoding credit card information online. Make sure that the website has a secure server. These sites usually have indicated the security measures in place. Lastly, be aware of your surroundings. You never know if someone is snooping whenever you are withdrawing from the Teller Machine or buying from store using your credit card.

Personal awareness of you information is the key in make sure identity is not stolen. One should regularly monitor accounts, bank statements, and credit report. Any irregularities found should right away be reported or disputed.

Bottom line, it is our own responsibility to protect our identity. If this is stolen, it is ourselves who is to be blamed. It is more difficult to dispute charges than preventing ID Theft to happen. Like the old saying, an ounce of protection against identity theft is better than pound legal disputes.

Using your debit card is often easier than your credit card when paying in line at the local grocery store or shopping center. Plus, everyone knows that credit cards are evil, right?
It turns out that if you’re disciplined enough to use credit cards (meaning, pay them off in full right away), then you can use them to protect yourself from potential identity theft. They offer distinct advantages you might not be aware of.

The use of credit cards creates a two-layer protection system for you, while debit cards may have none or possible only a single layer. In the event that your card number is stolen, most banks will reimburse you after the thief cleans out your bank account. However, the key thing to remember is that your bank account will get cleaned out, which means at least a day or two with no money. The money will literally be taken from you, and you may bounce checks unexpectedly. Plus, if the bank decides for any reason not to reimburse you, the money is gone for good. I once had a card number stolen and the bank only reimbursed for bounced check fees, but that was before identity theft was so widely known. Also, bear in mind that if you use an overdraft account, the crook can wipe that out as well.

The opposite is true with a credit card, since by the nature you are borrowing money when you use the card (that’s the danger of a credit card, right?). If the thief racks up a big shopping spree on your account, you are only liable for up to $50 of the total, and since the thief was using your credit, not your actual bank account, you aren’t suddenly wiped out.

You must dispute the bill in these cases, but as long as you are on the level with the credit card companies, you might as well set their massive corporate credit card company attack dogs on the loose to get those crooks. The credit card companies often have former detectives and FBI agents working for them, so get them involved. While you can do a little digging on your own, it is nothing like brining the full force of the fraud investigation department for Citibank or MasterCard. These guys deal with crooks like mobsters and counterfeiting rings, so they will go after whoever stole your card. Because, after all, if the thief gets your debit card, he steals your money, but if he gets your credit card, he steals MasterCard or Visa’s money.

Neither situation, having either your credit or debit card stolen, is a desirable one. This protection is also not a reason to run up your credit card debt. But, if you manage your money and your credit wisely, you should be aware of this protection you can use. Making purchases online with a debit card should be avoided, and use caution when shopping online even when using a credit card.

I want to be clear; the best way to avoid either credit card theft or debit card theft is by paying with cold, hard cash. It’s a good policy anyway. But if the time comes to pay electronically, consider your options and protect yourself.

Strange as it may seem, checking accounts are nothing new as the ancient Romans used them in Three Hundred BC. At that time a person would go to a merchant and make a purchase. When he learned what amount he would need to pay for that purchase, he would then go to his financial institution where he would get a letter stating that there was money to pay for the purchase. That letter would contain the name of the merchant as the payer, the name of the purchaser as the payee, the amount and the date and the signature of the banker. You will note that the procedure is different but the information contained in the letter is the same as our checks.

Getting a checking account is not difficult. After you have shopped around and found the bank that will give you what you want which generally is something like: free checking, a debit card, low deposit to start the account, low overdraft fees or overdraft protection and whatever else you may want. There are two kinds of accounts you may want to look into. The two options are the interest bearing account and the free account.

The interest bearing checking account sounds good, but most banks require a large deposit of at least $2,000. Before you run off to the bank to open an interest bearing account, know that the checking account will probably give you less than 1% and a money market account. On the other hand, a CD will give you 3%. There are also finance charges with your interest bearing account if you fall below the required balance.

A free checking account usually has a very small opening deposit and has no maintenance charges, and a debit card is issued free. However, there is a charge of about $35 in most banks for overdrafts. On the other hand you can buy overdraft protection for a monthly charge.

You should review all offers and determine which is best for you when you want to get a checking account.

Having a checking account is a necessary requirement for anyone who wants to live a normal life in this shopping-oriented society of ours. Who doesn’t think that life would be a bit easier with a checking account? After all, with an account, you have the ability to write checks and to use a debit and credit card linked to your account. You can also gain access to a nationwide network of ATM machines, giving you access to your cash no matter where you go.

One reason that some people put off opening a checking account is that they are concerned about having a check or debit card transaction bounce. And, this concern is justified. After all, overdraft fees are a big business for banks. In 2006, banks earned over $25 billion in overdraft fees in the U.S. alone.

People looking to open a new bank account often look for checking accounts with bounce protection. These accounts have overdraft protection programs in place. Here is how overdraft protection programs work:

1. The customer has a certain amount in the checking account, say $100.

2. The customer does his or her best to not make any charges against the account that are larger than this current balance amount.

3. One day, however, the customer misjudges the current balance and makes three charges against the account: one for $45, one for $60, and one for $5.

4. The first charge of $45 is fine, but the $60 charge puts the account into a negative balance, and the $5 charge also hits the account when it is “in the red.” The result: the bank covers all three of the charges, due to the fact that the overdraft protection program is in place for this customer. This is an advantage on the one hand, because it means that the vendors to whom the customer promised the payments will get paid on time.

5. However, given that the bank honored the two charges that caused the account to have a negative balance, the bank also charges the customer an overdraft fee. This fee can range, but is usually in the $25 to $35 range per charge. If the fee is $35, in the example above, the customer would have to pay ($35 x 2 =) $70 in overdraft fees!

As we can see, checking accounts with bounce protection have their pluses and minuses. Is bounce protection a good thing? Yes, they are good in that they cover outstanding charges. But, the fact that they charge such high fees makes them very expensive.

The very best checking accounts are those that offer bounce protection but do not charge a fee. Yes, surprisingly, there are banks that offer bounce (overdraft) protection without charging a fee. These banks charge a low monthly fee which is far less than what the average person pays in overdraft fees per month.

A final note: have you been rejected recently for a new checking account? Your name may have been reported by a bank to something called Chex Systems, a service that banks use to evaluate credit risk levels for prospective checking account holders. Fortunately, some banks now offer second chance checking accounts. These banks promise to never refer to Chex Systems when making decisions on a new account holder, increasing the likelihood of acceptance.