Why I hate debit cards

January 25, 2011

Today is my 46th birthday and it is off to a great start.  I do not care about my birthday since I have had quite a few of them now.  They also started to take on less significance once Beth refused to honor my only yearly birthday request:  a coupon allowing me to "pick my position".  (If you know what I mean).  As it turns out, her position on my position was that I should feel darn lucky to be able to get with that at all, so back off on the weird requests.  Point taken.

So as for my birthday's great start today, I have just returned from spending two hours at The Target on my day off fixing an issue with a guest.  Due to this issue, I am going to step on my soap box and speak to you of the evils of debit cards. 

Creeeeeeeeeek.  That was the sound of a 46 year old dude stepping up on a box.

I will not give you all the details of what led to this guest issue other than to tell you that she did nothing wrong and the errors that occurred at Target included one honest mistake and one clerical error performed by someone trying to fix the honest mistake.  However, the end result was a bad charge on the debit card which led to an overdraft fee.

Issue number one involved the use by the guest of one of those Visa GIFT cards.  I know that these are well-meaning gifts, one step above giving someone a lottery ticket as a gift (seriously, do you really want them to win?), but they can cause some problems when you use them.  Please do not ever use these gift cards for a purchase that you may ultimately need to return.  Using them at restaurants or for gas purchases are perfect solutions to using one of these things, especially if you can be trusted to keep track of how much your remaining balance is.  However, if you use the whole balance at a retailer for an item, and then go to return that item, the systems in place at most retailers will probably default to putting the refund amount back on the original form of purchase-the gift card.  Did you hang onto it after you used it?  No, probably not.  Will you be on the ball enough when you make the refund to let the cashier know that the original "Visa" was a gift card that you no longer have and that the refund amount should be in the form of a store credit?  Probably not.  Don't get mad at the cashier, they are seeing a message that says "Visa credit".  They cannot tell that the "Visa" was a gift card.  the same goes with the AMEX gift cards as well.  Actually, if memory serves, AMEX calls theirs gift cheques or something way fancy.

Issue number two, and one that is more common, is the use of debit cards.  I know that they seem like a more responsible alternative to running up a balance on a credit card, and that credit cards are the scourge of existence to all the financial issues the nation is facing today, but it still comes down to the user and the systems that are in place.  If you are the type of debit card user who spends all the pennies that are in the account tied to the debit card, you are asking for problems.

Did you know that any time that card is swiped for a purchase, even if said purchase gets voided, the amount of the purchase goes into an untouchable reserve for up to 5 days?  Did you know that the amount of time it takes for a refund amount to go back into the account takes infinitely longer than the amount if time for the money to come out of the account?

Scenario:

You are in line at a cash register, probably talking on your phone, or messing with your kids, or finding your card in your wallet, or trusting the cashier/store that everything will ring up correctly; when the item you thought was $40 rings up for $50.  The transaction gets totaled, you swipe your debit card, get your receipt, and then notice the price discrepancy.  You call it to someone's attention, they void the transaction, and ring it again.  You swipe again.  Your card has now been charged, not only the $40, but $90 total. 

You get home, pull up your statement on line, call the store, ask for a manager, complain that you were charged twice.  Manager says they will look into it, and actually does so.  Manager calls you back, tells you that all their paperwork says the $50 transaction was voided.  And it was.  3-4 days later, the $50 transaction drops off your account.

Why does it take this long?  You will need to check with a blogger who knows this end of it.  I just know from years of dealing with it, that it does.

So during those 3-4 days, you go to use your debit card thinking you have $50 in your account, you buy something, and then find out you have overdrawn fees because you exceeded your limit.

Do you see where this is going and the hassle you will then have to go through to recover the overdrawn fees (if at all) and straighten out the whole mess? 

Therefore, my suggestion to you, is either to not use a debit card or understand how everything works.  I would like to tell everyone to not spend money in your account when your account is dangerously close to zero, but I do realize that today's economic times are what they are.

Of course, our poor economy today is all because of credit cards.

Can someone lend me a hand getting off my soap box now?