If you have a checking account with a bank, you are offered different ways to access your money other than using a check or a credit card.  You may qualify to receive a plastic card, which can be an ATM (Automatic Teller Machine) Card, Debit Card, a Check Card or a card with combined features.  When you want to get cash or make a purchase, you put your card in a machine, enter a pin number (a secret identification number), type in the amount you want to withdraw or use to pay a bill (not necessarily in this order) and the machine will check to see if you have the money in the bank.  If you do, the transaction will be processed and you can receive your cash or merchandise.  If you don’t, it will deny the transaction.  This is one way to make sure you don’t spend more than you have in the bank.  If you use your card other than in a branch of your bank, there might be additional fees for the use of the ATM.  You will always be shown what the fee is.  You can agree to accept the fee and proceed with your transaction or, deny it and you get your card back and your transaction will not be processed.
  • ALERT:  Historically, one of the benefits of Debit Cards are that banks do not allow debit card holders to withdraw or charge amounts higher than their available balance.  However, recently (Fall 09’) some banks are allowing debit card holders to charge more, and then imposing significant overdraft coverage fees, so as $25, to cover the amount you asked to withdraw or charge.  For example, if you make a charge for $35 and you only have $25 in the bank, the charge will go through, the bank will “loan” you to money.  For this service you will not only have to make up the $10 you were short, but also pay a fee of $25.  If you are oppose to this type of fee.   Let your bank know, in writing, and tell them you want to opt out of overdraft coverage.  The only negative is that you won’t be able to charge or take out more than you have in the bank…..But wasn’t that what Debit cards were supposed to do?  There is a Consumer Overdraft Fair Practice Bill making its way through Congress, Stay tuned.