Safety, Practicality of Debit Card Online

bjs_7 · 10-30-2007, 06:40 AM

Well, I just recently got a debit card and learned that I can do electronic transfers and such to my new account. I'd like to occasionally buy a few fairly inexpensive items online (shoes, clothes, a DVD here and there). My question is whether or not using a Visa debit card online is safe. I know I could use a credit card obviously, but I don't want to get into that ballgame (thank you Dave Ramsey). unless absolutely necessary. Thought? Experiences? Thanks a lot!

I asked in this forum because I know the parents are wonderful (and wise)!

geezermom · 10-30-2007, 07:04 AM

Check with your bank. Mine provides a special eSpend card--a "substitute" debit card number that can only be used online and has other characteristics (which escape me at the moment) that make it difficult to compromise. My debit card number was stolen online once, so I don't recommend it. I have been banking and shopping online for years, but since that incident I've never used my debit card number.

Marian · 10-30-2007, 07:05 AM

My son, a college senior, conducts his entire financial life using online banking and a debit card. I don't think he even knows where his checkbook is. In four years, he has never had a problem.

Chedva · 10-30-2007, 07:35 AM

One thing to remember, though: If your credit card is misused or stolen, you are not responsible for the charges after $50, and some credit cards will even waive that if you report the misuse promptly. Your credit card company will also mediate between you and a vendor if you dispute a charge.

Debit cards have no such protections.

I advise using a credit card, and then immediately transferring the money from your bank account to the credit card account. Or, if you have the discipline, paying off the credit card every month (that's what I do).

Knitter · 10-30-2007, 12:40 PM

The post from Chedva is not correct. I'm a consumer financial services lawyer and am familiar with the laws that apply to debit cards. Your maximum liability for unauthorized use of your debit card is $50 if you report the loss or theft within 2 business days of learning that the card is lost or stolen. And, most banks don't charge you even the $50. If you don't notify the bank within 2 business days, your liability goes up to a maximum of $500. You also have to check statements. If you discover an unauthoirzed transaction on your statement, you have to notify your bank within 60 days after the statement was sent to you. If you don't then you will be responsible for all use that occurs after the 60 days and before you give notice. So, you potentially do have more liability with a debit card, but only if you don't examine your statements or don't promptly report a lost/stolen card.

ellemenope · 10-30-2007, 12:50 PM

One problem with unauthorized transactions that take money from your bank account is that it can take some time for the bank to do their investigation and replace your money. This happened to a neighbor of mine. She got the money in her checking account replaced, but it took 1-2 weeks. Thank goodness she didn't need the money in the meantime.

I wouldn't use a debit card online. I do use credit cards online.

Chedva · 10-30-2007, 12:53 PM

I apologize for my incorrect information - I guess it's out of date.

BunsenBurner · 10-30-2007, 01:19 PM

Debit cards can be a real pain. I saw a segment on the evening news where a lady was out of her entire week's budget after purchasing $20 worth of gas. The gas merchant placed a "hold" on her entire balance of $200 for a week, and she could not buy groceries with her card. I though that was totally ridiculous and untrue until my teenager called me in panic that her card with $50 on it was rejected when she was trying to buy a $5 sandwich. Guess what - she just filled her car with gas. I called the bank, and yes, there was a "hold" on her balance way beyond the amount paid for that gas! It cleared out in about a week, but from now on she pays cash for her gas.

We stick with credit card purchases and just pay off the balance every billing cycle. It takes discipline, but it is less hassle.

To the OP: check with your bank about its policies.

bjs_7 · 10-30-2007, 03:27 PM

Thank you all for your help so far.

My bank is a fairly small local bank, and I don't see any online services other than electronic transfers between savings and checking. I plan to keep a small amount of money in my account since it is non-interest bearing, but if I overdraft, it will deduct from savings. I'm kind of up a creek in that aspect...

I really want to have online buying capabilities, but I really don't want to get into the credit game this early in my financial life. I've got the money and the discipline; I simply don't want the hassle (and my parents will more than likely get all over me about saving for college instead of opening a credit line and spending money on "trivial" things).

Side note: when I signed up for the account, the lady told me that gas stations post the money differently than all other vendors, so those situations are completely normal (though obviously pretty outrageous and unfair when the amount gets that extreme).

PhatAlbert · 10-30-2007, 03:31 PM

If you use Paypal you don't even need a debit card. They can do electronic transfers directly from your account, savings or checking.

bjs_7 · 10-30-2007, 03:48 PM

Sweet! That may be a temporary possibility.

Shrinkrap · 10-30-2007, 04:05 PM

A good credit card history can be a plus...at least it used to be.

jym626 · 10-30-2007, 04:47 PM

I posted this in another thread a few weeks back comparing debit and credit cards:

Quote:

Your Money: Credit beats debit in 7 frugal ways

By Marshall Loeb

New York —- It's a question we face daily that still leaves most of us mystified: "Debit or credit?" Here, courtesy of Consumer Reports' Money Advisor, are seven reasons to opt for credit:

Credit costs you less. Some banks charge for so-called in-store "PIN-based" debit-card transactions. Fees range from 25 cents to $1, depending on the bank, Money Advisor reports. By choosing a "signature-based" transaction, you sidestep these fees.

Credit won't result in a hold on your account. When you use a debit card to reserve a hotel, rent a car or even fill your tank, vendors sometimes put a "block" on your checking account until the transaction is processed —- and the amount of the block can significantly exceed the purchase. Using your debit card to buy $25 worth of gas, for instance, may result in $100 of the money in your account being "blocked." If you're running a low balance, this can result in punishing overdraft charges.

Credit makes it easier to cover your bases. If you haven't been keeping a close eye on your bank balance, it may be a good idea to choose the credit option on your debit card because it takes longer for the money to be debited from your account (usually around two days). This gives you a little time to make sure you have enough in your account to cover the charge.

Credit offers better rewards. While some debit cards now offer rewards, such as air miles and cash-back bonuses, credit-card rewards tend to be far more generous, according to Money Advisor.

Credit allows interest to accrue. If you religiously pay off your balance at the end of the month, you stand to make more money by paying with a no-fee credit card. Why? Because you can allow your money to grow in an interest-bearing account until your bill comes due.

Credit gives you an out. Using a traditional credit card makes it easier to reverse the charges if you get into a dispute with a merchant or vendor.

Credit shields you from liability. If someone gets hold of your credit card and wracks up a laundry list of charges, you're typically responsible for only $50 worth of fraudulent charges. If you're unfortunate enough to have your debit card stolen, you may be liable for as much as $500 in unauthorized purchases, unless you report the theft within two business days.

I seriously dislike debit cards. Shrinkwrap is correct- you can start building good credit with a credit card. If you are disciplined with it, as you say you are able to be, and you pay off your bills each month, you get essentially a free loan between the time you make the purchase and the time you pay the bill. Get the credit card and be responsible with it. You will not regret it. My s. has excellent credit and is very responsible with his card. He has been so diligent with paying on time (pays electronically) that when he accidentally paid his last payment a few days late (he was out of town and forgot), he called them and they waived all late fees and penalties because he is already such a good customer!

bjs_7 · 10-30-2007, 05:47 PM

Even though I'm not a minor, I am still in high school and might have to battle my parents a little (slightly ridiculous, I know) to get their "approval." Are their any good ways to approach this?

Now, I guess the issue is helping me to find a credit card for a "beginner." I don't need to many bells or whistles as I don't plan to spend much. I would definitely plan to pay the bill on time every month, so the interest rate is only semi-important. I'm just really uneducated in these matters.

Chedva · 10-30-2007, 06:06 PM

Go to the bank where you have your checking account. They'll have many different ones to choose from, and they can help you figure out what credit limit, etc. Just make sure that you get one with no annual fee.

If it's all at one bank, it's also easier to pay; you just transfer money from your checking account to your credit card account. You can even do it at an ATM as well as online.