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Debit Cards Are Not Always Free To Use, Review Your Bank's Fine Print

By Don Marks on May 18, 2012

Unlike credit cards, debit card or cash cards do not have a "debt" angle to them. They function like prepaid cards while offering most conveniences of a credit card. Generally, when you open an account with a bank you will be able to avail of a debit card facility. Some banks even provide them for "free". They're essentially a hassle-free alternative to carrying cash or checks and you can never go wrong with a debit card since you can only spend as much money as your account contains! But are they really "free"? Not always and let us learn why not.

As an introductory offer, most banks offer free debit cards to lure customers. There's always a fine print associated with freebies which customers conveniently ignore much to the advantage of the banks. Occasionally, the fine print follows months after you have begun operating your account, and customers often dismiss it as yet another useless communication from the bank. Most likely the communication is sent to inform you that the "free" debit cards will now attract some fees along with a list of transactions for which the fees would be levied.

What the Fine Print Contains

While credit cards are essentially a short-term loan until you make your payment at the end of the "grace period" after which an interest rate applies on the unpaid debt, debit cards are relatively harmless! You're not really borrowing with a debit card but it is still a convenience and that is what the banks charge you for. So what's the big deal with using them for a small charge? Well, with credit cards you are aware of the fees and interest rates and it makes sense to a great extent because you're not using your own money. But with debit cards, you are essentially paying fees to spend your own hard-earned money and there's no grace period for repayment! The money is debited from your account immediately. And wait till you understand what kinds of debit card charges are levied.

Typical transactions that attract Debit Card fees:

Balance enquiry (read the fine print to check how many balance enquiries are allowed for free during a month after which up to 40 cents could be levied)
Card denial ( up to 50 cents could be charged for a card denial)
Statement fees ($2 to $7 could be charged for paper statements delivered to you)
ATM fees (some banks charge ATM fees after a certain number of free transactions in a month, several banks levy a charge if you withdraw from their ATMs with another bank's card)
Card renewal and PIN change fees

Debit card charges can add up to a considerable amount depending on your usage and the terms and conditions of your bank. Do not ignore the fine print and you can avoid a shock when you get your annual statement that puts debit card charges up to a few hundred dollars! No matter what your bank says about free debit cards it is in your best interest to personally review the fine print.

Cover personal finance to help consumers make good financial decisions, with credit cards, balance transfers and financial savings.

Original article published on SooperArticles.com

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