Your Money

Financial advice, tips to make your dollars stretch further

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Do you shop with the wrong charge card? (updated Nov. 97)

Highlights, Quick General Recommendations:

If you have Master Card or Visa credit card(s), cancel your check cards and debit cards.

Specifically ask your bank to remove the debit card feature from your ATM card.

Choose credit cards with no annual fee and/or lower interest rates.

Choose cards with rebates and bonuses.

Cancel your store and gas station credit cards.

Don't put more than ten dollars of value on a vending machine or subway magnetic card.

Our Recommendations:

An ATM card with no credit or debit privileges

A Mastercard or Visa credit card

Another general purpose credit card of your choice, such as American Express or Discover, with no annual fee.

If absolutely necessary, stored value cards with no more than $20.00 per vending system..

Problems with Ordinary Debit Cards

Caution:  Many debit cards look like credit cards.

We believe that, since credit cards are so easy to get and practically all merchants who accept debit cards also accept credit cards, there is no need to own a debit card.

Debit cards were invented because the banks wanted to get their money sooner, without waiting for you to receive a bill and send in payment.

Your liability in case of loss or theft is $500.00 compared with $50.00 for credit cards if you report the loss or theft promptly. Your liability is almost unlimited if you don't catch and report a lost card promptly.

Merchants can freeze funds in your bank account in excess of the actual purchase, and this may cause your checks to bounce.

In case of dispute, many banks won't put the money back into your bank account until the dispute is resolved and resolved in your favor. Whereas with credit cards, your personal bank account is not involved, although your credit limit may be reduced during the period of the dispute.

Although there are no payments and no finance charges with debit cards, if your bank account balance is big enough to support a debit card, it is also big enough so you can send payments to a credit card company promptly and avoid all finance charges.

If your ATM card has debit card privileges you don't want, specifically go to your bank to have those privileges removed and a new card without a Mastercard, Visa, etc. logo issued.

Problems With Combination Debit/ATM Cards

The root of all the problems is that the card allows money to be taken out of your bank account without using a PIN number (password).

All of the problems that apply to ordinary debit cards also apply here.

Problems With Stored Value Cards

Magnetic stripes can be erased. Most stored value card issuer have no way to issue refunds in case of dispute, and also no way to produce a human readable transaction history that could be used to settle disputes.

The machines that handle the cards can malfunction, damaging the card and making it unreadable.

The machines that handle the cards can cheat you, and you might never find out until the card seemed to expire before you thought it should. There have been instances where crooks installed a fake card reader next to a vending machine and customers had value deducted from their cards.

I don't like entrusting the existence of my money to a strip of magnetism.

The Minimal Advantages of Stored Value Cards

(1) Takes up less space than a wad of cash

(2) The merchants or vending machines don't accept any other form of payment

(3) There may be bonuses or discounts for using the stored value card.

Problems With Smart Cards

If the card is lost, your loss can be the full value of what remains "on the card".

With some brands of smart cards, there is no provision for refund in case of dispute and there is no human readable transaction history that could be used to settle disputes. Inquire before getting a smart card.

The machines that handle smart cards can cheat you, and you might never find out until the card seemed to expire before you thought it should. There have been instances where the bus driver set the fare box incorrectly and riders were wrongfully charged an excessive fare. Even if you catch the error on the spot (some fareboxes and card readers display the amount charged) it is a hassle to get it corrected.

Some smart card systems maintain a cumulative data bank of all transactions by all their card holders. This is better than letting just the cards hold the information. But there have been instances where some crook in the data bank department falsified the data bank and stole money, causing cards to expire prematurely.

If your smart cars system has a central data bank and you save receipts for all your transactions, you have a good although not certain chance of winning a dispute involving the card's expiring too soon.

The Minimal Advantages of Smart Cards:

(1) Takes up less space than a wad of cash

(2) Merchants honoring them might not accept checks or credit cards

(3) There may be a bonus or discount for using the smart card

Gas Station and Store Credit Cards

They are inconvenient. They take up space in your wallet or pocketbook. When you have lots of individual store and gas station credit cards, you have lots of small bills to pay and it takes time to write out checks and it takes more stamps to mail them.

Most stores that issue their own credit cards also accept general purpose credit cards. So there is no need to carry lots of store or gas station credit cards. The exception is if the merchant offers a rebate or bonus for use of that card.

Also a whole bunch of store and gas station credit cards, each with a several hundred to several thousand dollar credit limit you never use, shows up on your credit report as potential debt and may cause your next car loan or home mortgage to be denied. Since you will never charge to the maximum on all of the cards at the same time, it is better to just have two or three general purpose credit cards, sharing their credit limits among all of your purchases over the course of the year.

Never hand money to strangers until after you receive and inspect the merchandise you are buying.

Problems with long distance telephone cards you buy in gas stations or convenience stores::

1.  The per minute rate is high.

2.  If the value left on your card is exhausted in the middle of a call, the call is automatically hung up. People often stop using the card with just a few minutes left on it because of this, and the last few minutes go to waste.

3.  The cards expire after a few months.

4.  The company that issued the card might go out of business and your card becomes worthless as a result.

How to avoid these problems:

If you know how long you need to talk, you can better decide whether to use the "prepaid phone card" you bought in the convenience store or your regular telephone company credit card.

Since there is a stiff per call surcharge (formerly called the operator assistance charge) for using telephone company credit cards, you will find it better to use the prepaid telephone card when you are expecting to get someone's answering machine.

All articles (c) Copyright 1997, 1998, Allan W. Jayne, Jr. unless otherwise noted or other origin stated.

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