2881: 3 Times You Should Avoid Using Your Debit Card by Vekevia Tillman-Jones with Financial Finesse

[00:00:00] [SPEAKER_00]: This is Optimal Finance Daily. 3 Times You Should Avoid Using Your Debit Card

[00:00:06] [SPEAKER_00]: by Vekevia Tillman-Jones with FinancialFinesse.com.

[00:00:11] [SPEAKER_00]: And I'm your host and personal finance enthusiast, Diana Merriam.

[00:00:15] [SPEAKER_00]: We're going to jump right into our next post as we optimize your life.

[00:00:23] [SPEAKER_00]: 3 Times You Should Avoid Using Your Debit Card by Vekevia Tillman-Jones with FinancialFinesse.com.

[00:00:32] [SPEAKER_00]: One way to make sure you don't spend more than you make is by sticking to cash only by using

[00:00:37] [SPEAKER_00]: your good old debit card. That helps you make sure that you're only spending what's available

[00:00:42] [SPEAKER_00]: in your checking account and can be an easy way to budget as long as you're setting money aside

[00:00:48] [SPEAKER_00]: outside of your checking account for emergencies and other goals. However, there are some instances

[00:00:55] [SPEAKER_00]: where you may not want to whip out that debit card. Here they are, along with a hack to make

[00:01:00] [SPEAKER_00]: sure you're still basically using cash. 1. When Checking into a Hotel

[00:01:08] [SPEAKER_00]: What's the point? These days, most hotels have a disclaimer at their check-in desk about using

[00:01:14] [SPEAKER_00]: a debit card to check in. What is the deal with the extra hold on funds or pre-authorized holds

[00:01:21] [SPEAKER_00]: on your debit card or credit card when you check into a hotel? Since they aren't actually charging

[00:01:27] [SPEAKER_00]: you and it's a hold that will likely fall off, it doesn't really matter, right? That depends.

[00:01:33] [SPEAKER_00]: From what I've seen, the range of the holds can be anywhere from $50 to $200 per day in addition

[00:01:40] [SPEAKER_00]: to the actual cost of the room, including tax. The hotel is essentially protecting themselves

[00:01:47] [SPEAKER_00]: in case you decide to destroy the room and is establishing a line of credit for expenses you

[00:01:53] [SPEAKER_00]: might charge to your room. And as long as that hold is in place, your bank considers that money

[00:01:58] [SPEAKER_00]: spent. For some, this is no big deal. For others who might be traveling on a tight budget and don't

[00:02:06] [SPEAKER_00]: have extra money just laying around in their checking account to be held up as temporary holds,

[00:02:12] [SPEAKER_00]: this could pose a problem. Trying to spend those held dollars before the hotel releases it

[00:02:19] [SPEAKER_00]: could lead to an overdraft in your account, even though the hold eventually goes away.

[00:02:25] [SPEAKER_00]: As you may know, overdraft charges when money is tight often become like a snowball where the fees

[00:02:32] [SPEAKER_00]: lead to further overdrafts and further fees. Ugh, what a way to ruin a trip! What can you do instead?

[00:02:40] [SPEAKER_00]: You can still use your debit card to pay for your room. Just make sure you use a credit card

[00:02:46] [SPEAKER_00]: to check into the hotel instead. Yes, I said your credit card. When you check out, make sure you go

[00:02:53] [SPEAKER_00]: to the front desk and use your debit card to actually pay for your hotel stay and let the

[00:02:58] [SPEAKER_00]: hold fall off your credit card. Number two, when shopping online. What's the point? Sometimes it

[00:03:06] [SPEAKER_00]: seems like the internet is just one big hackathon with thieves stealing your info no matter how hard

[00:03:12] [SPEAKER_00]: you work to protect it. Simply put, when entering payment information online for a purchase,

[00:03:18] [SPEAKER_00]: there's too much risk of your debit card number being stolen. Someone could literally wipe out

[00:03:24] [SPEAKER_00]: your bank account and send your account into a spiral of bounced checks, returned items,

[00:03:29] [SPEAKER_00]: and those pesky overdraft fees. Also, the rules around debit cards and fraudulent transactions

[00:03:36] [SPEAKER_00]: add in a time restriction, typically 60 days. If you're late at realizing someone made

[00:03:43] [SPEAKER_00]: unauthorized transactions on your account and you don't report it within the allotted time frame,

[00:03:49] [SPEAKER_00]: you could be out of the money for good. What can you do instead? You might think I'm crazy

[00:03:55] [SPEAKER_00]: for suggesting this, especially if the reason you're sticking to cash is because you're prone

[00:04:00] [SPEAKER_00]: to overspending online. But you probably should use your credit card when shopping online,

[00:04:06] [SPEAKER_00]: since it's much easier to get things resolved if your account number is stolen.

[00:04:11] [SPEAKER_00]: An important difference is that a fraudulent transaction on your credit card does not

[00:04:16] [SPEAKER_00]: deplete your funds in your checking account. The transaction won't eat up money you've budgeted

[00:04:21] [SPEAKER_00]: for important items like your mortgage, rent, your kids' daycare expenses, et cetera.

[00:04:27] [SPEAKER_00]: Credit card companies are also much quicker with crediting your account back to make you

[00:04:33] [SPEAKER_00]: whole from unauthorized transactions. To stick with the cash-only plan, just take an extra step

[00:04:40] [SPEAKER_00]: after completing an online purchase to log into your credit card and make a payment from your

[00:04:45] [SPEAKER_00]: checking account in the amount of your charge. Voila! You're basically still spending cash,

[00:04:52] [SPEAKER_00]: but without the risk to the rest of your balance.

[00:04:56] [SPEAKER_00]: And number three, when making a big purchase. What's the point? Most credit cards offer purchase

[00:05:03] [SPEAKER_00]: protection. So if your new washer bites the dust and the manufacturer won't help, you can put your

[00:05:10] [SPEAKER_00]: credit card company to work for you. It's much cheaper than an added warranty and usually just

[00:05:16] [SPEAKER_00]: as effective. What can you do instead? Use a credit card to gain that protection,

[00:05:23] [SPEAKER_00]: then immediately pay the balance with cash in your account, just like shopping online.

[00:05:29] [SPEAKER_00]: Of course, for those who are simply not comfortable with credit cards or feel your

[00:05:34] [SPEAKER_00]: financial situation is much better off leaving credit cards out of your life,

[00:05:39] [SPEAKER_00]: just make sure that you pay close attention to your checking account so you can address

[00:05:44] [SPEAKER_00]: unauthorized transactions as soon as possible. I suggest checking in each morning as part of your

[00:05:51] [SPEAKER_00]: smartphone routine. After checking email, Facebook and Instagram, make a quick check to your bank

[00:05:57] [SPEAKER_00]: account to make sure there are no surprises. You just listen to the post titled, Three Times

[00:06:08] [SPEAKER_00]: You Should Avoid Using Your Debit Card by Vickievia Tillman-Jones with financialfinesse.com

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[00:07:16] [SPEAKER_00]: This is a paid advertisement. I thought these were great examples of situations where it makes more

[00:07:23] [SPEAKER_00]: sense to use a credit card, and I have a few more to add. Similar to the hotel example in this

[00:07:29] [SPEAKER_00]: article, rental car companies often place a hold on your card for the estimated total plus any

[00:07:36] [SPEAKER_00]: potential incidentals, so it can be helpful to use a credit card in this scenario. Also, many

[00:07:42] [SPEAKER_00]: credit cards offer complimentary rental car insurance as a part of their benefits. This

[00:07:48] [SPEAKER_00]: coverage is typically secondary to your personal auto insurance, meaning it covers what your

[00:07:53] [SPEAKER_00]: primary insurance doesn't, such as deductibles or certain damages. In some cases, it can even act

[00:08:01] [SPEAKER_00]: as a primary coverage if you decline the rental company's insurance. This can save you money by

[00:08:07] [SPEAKER_00]: eliminating the need to purchase the rental company's often expensive collision damage waiver

[00:08:13] [SPEAKER_00]: or loss damage waiver. Another time to use a credit card is when you're traveling internationally.

[00:08:21] [SPEAKER_00]: Credit cards often offer better currency exchange rates than what you get at currency exchange

[00:08:25] [SPEAKER_00]: counters or with a debit card. Additionally, many credit cards come with travel perks like no

[00:08:32] [SPEAKER_00]: foreign transaction fees, travel insurance, and emergency assistance, which can save you money

[00:08:37] [SPEAKER_00]: and hassle when abroad. And that'll do it for today. Have a great day and weekend, and I'll be

[00:08:44] [SPEAKER_00]: back here tomorrow where your optimal life awaits.