Southwest Life

More and more it seems, businesses no longer accept checks (unless, perhaps, with a pint of blood or my firstborn). It
is becoming a cash, debit or credit-card system.


According to Visa, debit cards overtook credit cards last December as the payment of choice.


With personal finances being what they are, many feel debit cards provide a greater sense of control and are safer than
cash. Many use a debit card as a spending- control mechanism for students or debt-laden consumers trying to pay off
their bills and not wanting to take on more debt.


Some consumers are using debit cards in a backlash against credit-card companies raising annual interest rates (some as
much as 36 percent), slashing credit limits and instituting fees in response to upcoming new regulations.


The debit charge is linked directly to your bank account, while the credit card is a charge against a preapproved
credit limit.


Other than that, the cards are becoming more and more similar, particularly how it relates to cardholder liability.
Federal regulations require financial institutions to cap your liability at $50 if you notify your financial
institution within two business days from the moment you learn that your debit card has been lost or stolen. Some have
gone beyond federal regulations and adopted zero cardholder liability policies on unauthorized use of debit cards with
adequate specified notice.


Despite the safeguards,
especially at this time of
year, debit-card users must
take precautions.


Protect your debit card as you would cash or a credit card. Start by thinning out the number of cards you carry in your
wallet - one to three is probably all you truly use. Then make photocopies of all cards (front and back) remaining in
your wallet and store those photocopies in a secure location. Then, as much as I hate to suggest you add another number
to remember, it is prudent to select a PIN or electronic password that can't be guessed easily (not your birth date or
personal names - mix numbers and symbols in your PIN). Memorize it. It doesn't do much good if you write it on your
card!


With the advent of banking online, it is much easier to check your account frequently and ensure all debits made are
yours.


Another area that demands attention is overdrawing your account. Many institutions do not honor the overdraft
protection on the debit card (though they do for checks).


The Federal Reserve recently imposed rules that will make it harder to slap customers with overdraft fees. These rules
will prohibit banks from charging overdraft fees on automated teller machine and one-time debit-card transactions
unless the consumer opts in to the overdraft service for those types of transactions.


You can avoid overdraft headaches with debit cards simply by keeping track of transactions and recording them - that
old-fashioned checkbook register.


If you do use an overdraft line of credit, repay it as quickly as possible (though mine is still a lower interest rate
than my credit card). Finally, know your limits as well as the financial institution's limit as to daily withdrawals,especially at this time of year.


ricekw@co.laplata.co.us or 247-4355.


Wendy Rice is family and consumer science agent for the La Plata County Extension Office.