Part 16 (2/2)

Noncredit Pay

2 Do debit right

3 Li

Paying with cash has a febacks For exaht not be convenient to pay for very expensive iteet no rewards points or fringe benefits when paying with cash If you haven't chosen a bank wisely, you ht have to pay ATM withdrawal fees You receive no autoet with credit card bills, canceled checks, and bank statements And, of course, there's the soed and lose your cash that way

But using cash can be a fabulous idea For one, it could help you curb i Studies show that consu plastic, rather than cash That's because people suffer a psychological pain when handing over bills and coins It feelsplastic That's because the transfer of funds is right in front of you, rather than occurring in so banks The transfer is proxih to feel the loss

Just as ies or overdraft fees orwith plastic

A related and profound point is this: When you use cash, you can spend the money you have but no more If you don't have thewhen the money runs out If you have 200 in cash to spend at the supermarket, you could be forced to place iteh money

Surely, these points are not news to you, but youtireat form of currency

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Nowadays you can actually withdraw more money from an ATM than you have in your account Banks call it ”courtesy overdraft protection” They give you more money than you have in your account and then slap you with an overdraft fee of 20 to 40 and ies on theyour account by personal check or debit card To avoid overdraft fees and interest charges, keep track of spending and obtain real overdraft protection, where you instruct the bank to dip into another account, such as savings, when a checking account is overdrawn And keep a cushi+on of about 500 in your account at all ti debit cards is a fine alternative to using cash and credit cards Also known as a check card, a debit card is more convenient than cash or personal checks You use it like a credit card, but the money comes immediately out of your bank account Most double as an ATM card toand avoid the risk of finance charges So drawback of debit cards is they are not afforded the same fraud protections under federal law as credit cards With a stolen credit card, you can lose no more than 50 out of pocket That's federal law But federal laeaker when it comes to debit cards With a debit card, you must report it within two business days to receive the 50 liability limit Otherwise, you're on the hook for 500, or after 60 days you could lose everything a thief steals from your bank account

Individual card companies, such as Visa and MasterCard, have policies that promise to limit your debit-card liability to zero, but these policies are not as strong as federal law and could change And even if the bank eventually puts money back in your account-and it doesn't have to for at least teeks-you could struggle to pay bills while you and the bank sort out the mess

You'll have to decide for yourself whether less fraud protection under federal law is a reason to avoid carrying debit cards in lieu of credit cards If you don't want the direct-debit feature of your card, you can ask your bank to replace your debit card with an ATM-only card, so you still have ATM access to cash

Another drawback of debit cards arises froas station or hotel, for example, routinely withholds an amount on a debit card until the transaction is fully processed That blocked a you could overdraw your account if you don't have an adequate cushi+on That can result in overdraft fees

And debit cards don't help your creditworthiness, like credit cards do For these reasons, the Privacy Rights Clearinghouse, a privacy advocacy group, recommends consumers never use, or even carry, debit cards

That's a hard-line stance against a potentially useful atives about debit cards, I like the credit cards responsibly

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When using a debit card, choose to provide a signature rather than PIN-choose ”credit” rather than ”debit”-if your bank charges for PIN transactions or grants rewards points only for signature transactions Either method subtracts money directly from your bank account

3 Limit Use of Checks

In short, checks are a lousy form of currency

It's true that you won't incur finance charges with checks, like youin the checkbook register But the advantages mostly stop there

Checks are the most inconvenient form of payment because it takes time to fill out a check, you have to pay for and reorder blank checks, and some merchants don't accept the the check andtaken from your account has shrunk dra of checks

More problematic is that checks are at thea thief would need to steal your identity is on your check, including your naularly paying bills by check just isn't a good idea anymore