Jul
24
Written by:
drfranco
Monday, July 24, 2006
Like most, I have a "fake" Visa or Mastercard, also known as an EFT card linked directly to my checking account. They are sometimes knows as (Visa)Checkcards or (MasterCard)MasterMoney cards. I must say these cards are very handy and convinient. At the grocery store I always see the old guy holding up the line while writing a check. I just can't help but think, "This is 2006! checks went out back in the days of cassette tapes."
First a little about liablity.
These cards are very different from "real" credit cards as far as the law is concerned. Consumer liability on "real" cards is only up to $50. But on these "fake" Visa and Mastercards liability could be as much as every penny in your account plus the overdraft!
The "fake" Visa and Mastercard work like this:
0-48 hours = consumer is liable for up to $50
48 hours - 60 Days = consumer liability increases to $500
60+ Days = consumer has unlimited liability
Also remember that the bank must conduct an internal investigation during which access to the missing money will not be available.
So, back to my question, I never know how to answer the clerk when that all to familiar question is asked... Credit or Debt?
Which method is better for me? Well let's look a little closer at the issue. Banks are only in the business, why? Well of course to make money. So that must be the difference but how? Well lets examine this in greater detail.
Choose Credit:
Pro for consumer - Some cards when used as credit give rewards points on purchases.
Pro for Bank - Blocking or Holding is when money is held in the account and is not available for use until the hold or block expires often a day or two later. Gas Stations are notorious for doing this.
Choose Debit:
Pro for Consumer - Account is debited immediately.
Pro for Bank - A POS fee may be charged each time you use your PIN, Some banks even charge a card rental fee. Most banks exclude Debit usage from points programs.
Further reading: http://www.ftc.gov/bcp/conline/pubs/credit/atmcard.htm
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