Potential Dangers of Debit Cards

Potential Dangers of Debit Cards

Debit cards are often seen as a more sensible option than regular credit cards. They represent more financial responsible choices, compared to using standard credit card. Debit card is a direct way for consumers for accessing their own money and they could do this with only a little fee for each transaction. MasterCard and Visa debit cards are among the most popular. However, with improper strategy; bank debit cards can prove to be quite expensive. Banks and other financial organizations don’t make and provide debit cards for free. They also seek to gain profit by taking some amount of money from consumers and merchants. So, you shouldn’t mistake debit cards as an efficient and smart way to utilize your money. However, you can use debit cards to take advantage of the whole situation.

Bank debit cards could have overdraft fees that could be quite expensive. It is a common fact that for financial institutions, they can gain profit by allowing transactions to go through, instead of declining them. When they decline transaction, they can’t charge consumers for convenience fees and overdraft. You should also know that in some countries. These fees can be unregulated. So, theoretically, a bank can charge you $100 for a $10 dollar transaction.  This is a stupid thing to do, but you can’t sue bank for doing that. In some cases, an overdraft fee could reach up to $40. It means that you will lose a lot of money, when you over-drafting ten times each week. It is understandable why banks really love overdraft and they try to cause you to have overdraft.

In general, banks will seek to maximize the overall fee income. You shouldn’t think that the overall process is simple. In general, banks will sort transactions by total amount. By processing the largest transaction first, they can guarantee largest amount of profits. You should consider how transactions in banks work. As an example, you may have a balance of $2,000. In the morning, you buy a $3 cup of coffee, a $6 big sandwich for lunch and $800 for mortgage payment. It means that the bank could hit you with three separate overdraft fees. It means that the total amount of overdraft fees can be exceedingly expensive. However, you may incur a single late fee if the bank processes them by the transaction time.

You may contact the bank to disable any overdraft fee, but many banks won’t comply to your request. Overdraft fees are too valuable, so it is unlikely that banks will make them optional. It is also possible for banks to want you to think that they are doing you a favour. As an example, you could be provided with the so-called “free checking”. In reality, you shouldn’t actually pay anything for knowing how much money left in your own wallet. In the end, instead of using debit cards; it is better for you to pay in cash for little transactions. In many cases, the simplest method is always the best.

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