Don’t Use Your Bank ATM Card
Last week I was charged $144 in bank fees for four ATM purchases, each under $10 (I will be closing that poorly rated SunTrust account). Among the things that make those fees so painful is that I had hundreds of dollars sitting in another account, and tens of thousands of dollars in unused credit on cards. (I pay credit card balances in full each month).
Reporter Bob Sullivan has a new book out, Stop Getting Ripped Off: Why Consumers Get Screwed And How You Can Always Get A Fair Deal. He was Monday’s guest on Fresh Air and he says I’m not alone. His solution:
I think it’s a terrible idea to spend money with debit cards, for a lot of reasons. The biggest one is that once upon a time, debit cards were considered safer than credit cards because you were spending your own money. But the banks that issued these cards realized they were losing money that way, and
so they added all these fees – the most significant being this overdraft fee, which you’ve heard so much about.
It’s very, very easy to overdraw your checking account using a debit card. And once you do that, it’s very easy to ring up six, seven, eight of these charges. So that hamburger could cost you $200 or $300. And especially if you’ve already spent a lot and now you’re kind of near the edge of your checking account once you pay your bills this month – you don’t want to be close. You don’t even want to give yourself the near occasion of ending up with an overdraft fee, because they almost always cascade. That’s a big headache.
But in a larger sense, what I’m really against is people using their main checking account, the place where their paychecks are deposited once or twice a month, and they write the big checks in their lives – the mortgage, the car payment. I’m really against people swiping their debit card and getting money from an ATM, and cluttering up those accounts with 30 or 40 transactions every month.
You’re just bound to trip up when you do that. This is called velocity in the banking world, and the more velocity you have, the more opportunities there are for mistakes.
He suggests you separate accounts into a “staging account” where you deposit paychecks and write the big checks. And an “allowance account” for everyday, petty-cash purchases. You call the bank and make sure there is no overdraft authorization on that account. The idea is that you always have a grasp of what money you have and where it is. But he’s generally against using ATM cards.
Ironically, I was, too. I understood that you have more protections for credit card purchases than for ATM — you can dispute a charge and refuse to pay on a credit card; with an ATM card, the money’s gone before you can dispute it. Banks generally honor disputes so I started using the ATM card. And made the mistake above more than once.
Listen to the full interview — or buy the book — for Sullivan’s complete critique of banks. I’m sure many of our readers will disagree with that critique but I am right there with him on every point. In any event, I will not be caught using an ATM card again!
12 Responses to “Don’t Use Your Bank ATM Card”
Other than at an ATM machine, never use your debit card. You shouldn't even carry it with you…at least not in the US. Use a credit card, watch your balance, and pay it off every month. When someone steals your card or your number…which can happen easily at any place where your card leaves your person for more than 5 seconds….the money they steal comes out of your account. Sure, you might get that money back, but not after days of fighting. Who knows how much will be taken out before you know it? Who knows how many checks will bounce because of it? And what if you really need some cash right now…and the money is gone?
Also…never use your debit card on the internet. In a happy world, your card data is safe, but in the real world, you have no idea who has access to your card numbers.
Debit cards are dangerous.
What about old people whom make the fatal error of trusting their banking institution because , well they are old, and, must trust societal institutions to survive?
What about border-line retarded people that are shoved out to live on their own without government help and have to trust their banking institutions?
What about banking TV commercials that simply lie there way into your trust?
Why is it that the capitalists always get their way and the common people continue to get screwed over by those that can buy government for the purpose of relaxing regulatory laws that protect American Citizens?
What once was fraud, is now business strategy.
Only in America.
It's time to go back to cash.
I use a debit card all the time. I have it set up so it won't authorize overdrafts. I almost never write checks so I never overdraw my account. About two years ago, my wallet was stolen and the bank froze the card before I knew it was gone. They called me to ask about suspicious activity and reimbursed the money while I was on the phone with them. I had to do a police report and get it to them in 10 days (not hard, but it did take a couple of hours at the PD). We closed that account, opened a new one, got new checks and a new card within five days. No fuss, no muss.
Of course, I don't use a bank. Banks never have their customer's interests at heart. I use a credit union.
most likely a rush to cancel bad cards and run to credit unions
We asked SunTrust to remove the overdraft option and deny the card if the funds were not available in the account. They said that was not an option.
I use a credit union, too. That was the account that had money sitting in it as SunTrust was charging me those fees.
Yes, it was my fault, my mistake. But as Bob Sullivan says, the banks are counting on that!
Its a caveat emptor world, and it should be. That maximizes individual freedom. I don't want a nanny state protecting me from my own mistakes or making me pay for someone else's.
And as to the elderly they can be some of the sharpest consumers around. Age does not disqualify one from being smart. Of course if someone is suffering from a mental condition that interferes with thinking, at any age, they need requisite protections extended by the state. And fraud should not be tolerated; in fact it should be punished.
But failing to keep on top of your own finances and blaming the bank? I've found the best way to avoid that is a good strong your-boot-to-your-butt consumer protection act. I've had enough experience with that myself to know.
[...] Don’t Use Your Bank ATM Card – The Moderate VoiceIt’s very, very easy to overdraw your checking separate accounts into a “staging account” where you deposit paychecks and write the big checks. And an “allowance account” for everyday, petty-cash purchases. You call the bank and make [...]
If you take responsibility to keep records of your account you shouldn't overdraw. With ownership comes responsibility. Stolen cards are of course a separate issue.
“a rush to cancel bad cards and run to credit unions”
I'm surprised the S&L people haven't exploited credit unions yet, with the bank mischief. There must be a horde of people who don't recall the S&L episode or never learned about it at all. Where's Neil Bush, Adnan Khashoggi, and the other characters? Look and listen to Ally's ads, and think about those in California long ago for Independence Bank. Now imagine all these characters and other S&L pirates like Keating (just ask McCain who that guy is) forming new credit unions. Homeland Credit Union (with branches in most states), etc. Perfect. What about the bankers, forming “alternatives” to banks?
“”a rush to cancel bad cards and run to credit unions”
Cancel your card, say goodbye to your bank, and come to Honest Credit Union. A BancAmerica company
That sounds like a lot of fuss to me. I've worked in the credit card industy for 15 years. I know how easy it is for someone to get access to your account. There is also the threat of a mugger dragging you to your ATM and then shooting you. By carrying a debit card, you are unneedingly creating more risk for no reason.