Prepaid debit cards give its holders the convenience of paying with plastic without the risk of bad debt. However, that doesn't mean owners of debit cards can let their guard down. True enough, incorrect use of debit cards can still lead one into trouble. In this article, let us discuss eight practical suggestions on how to spend with prepaid debit cards safely:
1. Put your personal spending in check. Unlike a credit card, a debit card does not give the privilege to make advanced purchases. However, if you deposit a large amount of money in your account, there is still the tendency to spend your cash on unplanned purchases. A cardholder must always be in control over his/her spending.
2. Monitor your purchases. The best way to keep track of your spending is to list down every transaction you make using your debit card. Keep a record of all your transactions so for your personal reference.
3. Avoid overdraft fees. Generally, debit cardholders are not allowed to exceed their borrowing limit. Nevertheless, there may be instances when your payment will be accepted even though the available fund in your account is insufficient. Watch out! You may be charged with an extra fee for these transactions. Overdraft fees can range from $30 or more, depending on your debit card. In order to avoid encountering this kind of problem, it is advised to always check your debit account.
4. Look out for "holds". Hotels and car rental companies usually impose a "hold" on debit cardholders when placing a reservation. Be sure that you understand the merchant's policy on "holds" such as how long your funds will be frozen and the exact amount that will be placed on hold. Furthermore, make sure that you have enough cash in your debit account to pay for the transaction, aside from the cost of "hold".
5. Choose a strong PIN code. A strong PIN code can protect you from unauthorized transactions. It is wise to create a password that has both letters and numbers. Moreover, the use of your personal information as PIN code should be avoided since these can easily be guessed by identity thieves.
6. Check your account often. Make it a habit to check your debit account online regularly especially after you used your card for payment. See to it that you were not charged for additional fees that you are not aware of. The Federal Law protects debit cardholders from unauthorized transactions but there is a limit ($50). In addition, you need to inform your bank about the unauthorized charges within 2 days after the transaction was made.
7. Never link your card to your savings accounts. To protect your bank details, do not link your debit account to your savings account.
8. Avoid using your card for large purchases. If you want to make a large purchase online, it's best not to charge it to your debit card. Always remember that debit cards offer only limited protection for buyers. By using a credit card on large purchases, you can enjoy Fraud Liability Protection and the option to dispute charges should you need to.