Follow up Q and A from the Article “Why I Still Don’t Like Debit Cards”

Responses to the article “Why I Still Don’t Like Debit Cards”

Q: I just read your piece on debit cards. Do you suggest using a credit card rather than a debit or should we just use cash?

A: I think that the best way to go is with a credit card and pay off the balance each month. You have good protection on a credit card and you strengthen your credit score at the same time.

Q: I know you don’t like debit cards, but what about using it as a credit card?

A: The problem is that you can't use a debit card as a credit card. You can push the credit button. However, it will always transact as a debit card in one form or another.

Q: I have gotten myself into a lot of trouble with credit cards and now use only my debit card. I am working diligently to pay off my credit card debt through collection companies. Based on your article, I am very concerned. If I lose my checking account, I lose everything.

Would it be smart to get a prepaid credit card to handle charges such as gas, groceries, restaurants, etc. If so, is there a reputable company out there that I can do this with? I really do not want to get another credit card and get into more trouble.

A: If you don't have the luxury right now to use a credit card, the message isn't to just not use a debit card. The message is to know and understand the risk that is associated with a debit card. That comes down to really watching your bank account. Also, talk to your bank and know ahead of time the procedures that are in place in the event that money is taken out of your account.

Q: What does a credit\debit card offer that is any different than a plain debit card?

A: There are two kinds of debit cards. There is an off-line card and an on-line card. An on-line card is a debit card where the transaction is immediately deducted from your bank account. It is much like an ATM card. An off-line card works just like the debit card with one exception. Instead of debiting your account immediately, it stores the debit for processing later -- usually within 2-3 days. So there is a float associated with this type of transaction. It doesn’t come out of your account automatically.

The downside to the off-line card is additional fees charged by the bank for that type of arrangement.

Copyright © 2008 Prudent Money and Bob Brooks. All rights reserved.