Issue Date: June 29, 2008
Be careful with debit cards
Your funds may be tied up longer than you think.
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Debit cards sure are convenient, but they also can wreak havoc on your bank account balance. Follow this advice to avoid nasty overdraft charges.
DON'T USE DEBIT CARDS FOR GAS PURCHASES.
Even if you spend, say, $25, the bank may put a freeze on up to $100 for as many as three days. If other charges come through during that period, you may easily overdraw your balance.
DITTO WHEN BOOKING HOTELS OR CAR RENTALS.
They often put an immediate hold on your account for at least the entire amount of your stay or rental (plus other potential services, like the mini bar), even if you plan to settle the bill with another form of payment.
BEWARE MULTIPLE OVERDRAFT FEES.
Say you use your debit card for a $5 latte, a $25 dry cleaning bill and $100 worth of groceries. Later, you realize you had only $75 in your account. You may expect an overdraft fee for the last purchase. But, at the end of the day, banks often rearrange your daily purchases from largest to smallest. In that case, you'll get hit with overdraft fees for all three purchases.
Bottom line: Be sure you have a cushion in your account before making multiple debit card purchases.
Walecia Konrad is an award-winning consumer writer.
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