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Forewarned is Forearmed Bank debit or ATM cards are ubiquitous. Their usefulness and convenience are undeniable. If your debit card has a Visa or MasterCard logo, you can use it just about anywhere you could use a credit card. Today you can use your logo debit card to make airline and hotel reservations and at most retailers. Since the funds are withdrawn from your account directly you don't have to worry about interest charges and accumulating debt as with a credit card. However, there is a dark side to bank debit cards you should be aware of. Diminished Fraud Protection The first danger is the limited fraud protection. Should your credit card be stolen and unauthorized charges made you are not liable for any amount over $50. Not only that, because it is a credit card, the fraudulent charges don't impact you immediately. However, if your debit card is stolen the thief could tap out your bank account rendering you broke immediately. Any outstanding checks and unprocessed debit purchases then hit your account and you are charged hefty overdraft fees. While most banks are willing to work with you and may restore the stolen funds and overdraft fees it may take a couple of weeks. In the meantime, you still have to deal with your creditors and the damage done to your reputation. Overdraft Fees I recently saw a television news account about a poor woman charged almost $500 in overdraft charges by her bank in one month. She did not understand that her bank had added overdraft protection to her account 'as a courtesy'. While she expected her debit card to be rejected if she did not have sufficient funds in her account the bank allowed the charges to go through overdrawing her account. Then they charged her a $35 overdraft fee for that and every other debit purchase and check subsequently processed. Before she knew it she had been charged almost $500 in fees. Ideally, we should always know exactly how much money is in our account at any point in time. Unfortunately, we have all been in this situation to one extent or another. Check and see if your account has overdraft protection as a 'courtesy' and have it removed if you don't want to risk potentially hefty overdraft fees. A little embarrassment at the register is a small price to pay considering the possible consequences. Bank Holds

I fill my car with gas at several different gas stations along my commute route. I've had some interesting experiences at some stations when I pay for my gas with my ATM card on the lane. Once my account was down to a balance of $100. I pumped $30 in gas and went on my merry way. Later that afternoon I stopped in the market to buy $40 in groceries. Knowing that I had $70 in my account I anticipated no problems with the transaction. However, I found my ATM card being rejected at the register! After embarrassingly leaving my groceries in the store I went home and contacted my bank. It turns out that the bank had placed a $75 hold on my account at the time I swiped my ATM card on the lane at the gas station. The theory being that they do not know the actual dollar amount of gas that I would actually purchase at the time of the authorization, thus the hold. Until the actual amount of the purchase clears the account, the amount of the hold is treated as spent. So, when I went into the market it appeared as if I only had $25 in my account and my $40 transaction was rejected. This happened a few times before I caught on to what was happening. On one occasion, over a weekend, it took 3 days for the hold to clear! During that time, the balance of my account was restricted by this hold. If you find yourself potentially in this situation, pay for your gas inside the store where they can send the transaction through for a specific amount. That way no extra holds are placed on your account and all your available funds are truly available. Also, it is my understanding that not all banks have this practice and, in all fairness, I don't want to portray them all as doing so. Extra Fees If you only use your debit or ATM card at ATMs belonging to the bank that issued your card, you are probably alright here. But be aware that some banks will charge a small usage fee to use even their own ATMs. Use an ATM outside of your bank's network and watch the ATM fees accumulate! I recently changed banks because they charged $3 every time I used their card on another bank's ATM network. This was in addition to the $2 fee the other bank charged for the convenience of using their network. I was being charged $5 for the privilege of getting to my own money. Use your ATM card on a different network 20 times a month and you could run up $100 in extra fees. If you fail to properly record these fees in your check register, you run the risk of overdraft and incurring additional overdraft fees! Merchant Mistakes Have you ever checked your monthly statement only to find duplicate transactions debiting your account? Remember those times the merchant asked to swipe your card again because the first transaction didn't go through? It has happened to me. If you used your credit card for this transaction, you can dispute the duplicate charge and it won't affect you immediately. However, if you used your debit card it may not be so easy. After you substantiate the duplicate charge to your bank they will most likely restore the funds. However, if the erroneous charge caused other checks or debit purchases to overdraw your account, you still will have to deal with all the damage they've done just like a stolen card.

Cavaet Emptor! Let the buyer beware. While I am not a proponent of credit cards, having been a victim of the debt cycle they help to perpetuate, they do have certain advantages over debit cards. I still think it is a good idea to maintain one credit card for emergency situations. Debit cards are certainly convenient and do not incur interest charges nor build your debt as may credit cards. However, they do have a dark side you need to be aware of to use them wisely and effectively.

Richard Stephen -------------------------------------------Richard writes on a number of topics including personal finance, investing, sports and technology. He resides in Southern California with his wife and 3 children. By day he works as an IT Project Coordinator. You can read more of his writing on the following sites:

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