Will that be Debit or Credit? (Part Two)
In the previous issue I started to point out things you should know about
using a Check Card One item was that you need to be aware that some funds in
your checking account may have a temporary hold and are NOT available to be
spent during the hold.
Another item to be aware of when renting a car is that some car rental
agencies do NOT accept Check Cards at all, while others may accept them only
if you have another form of identification that is on their approved list.
Even then, they will most likely need to establish your credit worthiness.
If you recall from part one, I mentioned that even though you can use a
Check Card as a Credit Card it is NOT a credit card. Nobody is giving you
“credit” as funds come out of existing funds. Thus to establish credit
worthiness they may require a copy of phone, electric, bank statement, etc.
Or they may run a “mini” credit check.
If you are planning to use your check card to rent a car it is important
that you check BEFORE you leave home of any special requirements. Better to
know NOW than when you finally arrive at place where you wish to rent a car.
I don’t want to deal with these extras, anything I can do?
In order to work around having own funds on temporary hold OR having to
prove credit worthiness each time rent a car, many people will have one
regular major credit card. They have the credit limit set to lower amount,
say $1,000, just enough to cover the temporary holds. (Yes! You can have
credit limit lowered on most major credit cards). They then use this card to
reserve/rent car and when they return the car they pay the bill using their
Check Card. A lot of car rentals will accept Check Cards or cash to pay when
you return the car. Again, check with agency beforehand.
A side note here: Even though you plan to use a “regular credit card” the
same “holds” exist. Instead of having money in your personal account on
hold, a portion of your credit limit is temporarily held. Thus if you plan
to use a card that has $1,000 limit but has a balance owed of $800 you don’t
have enough “available” credit to cover hold. So your card will most likely
get denied.
How about at a department store, which should I choose? There are many
things to consider on this. First, you need to check what the “rules” are
from the place that issued your Check Card. Some others things to consider:
- Are there any “transaction fees” for using the card as debit or credit?
- Do I get any benefit by choosing one over the other? Example - Some banks may extend the manufacturers warranty on items you pay for using credit.
- Can I enter PIN without people seeing what I enter? With all the advancement in technology it is much easier for someone nearby to take photos or video of your card number and you entering your PIN. With those numbers an unscrupulous person can make up a “white card” (fake debit card) and have fun at a nearby ATM at your expense. Always guard your PIN number when entering it.
- Do I need cash? Many banks charge a fee if you use an ATM not belonging to
them. A nice feature available at numerous is the ability to get “cash back”
when you pay for your purchase as Debit. Some banks do not charge you any
fee as this is a “point of sale” transaction. If this is true about your
bank, this is another option available to get smaller amounts of cash
without the ATM fees.
What about returns? The choice you make at time of purchase may determine
how your transaction is processed if you need to return an item. For example
on most purchases made as “Credit” the store will most likely put a credit
back into your account. While purchases made as “Debit” are treated more
like cash purchases with the store giving you cash on returns.
The choice to use Debit or Credit is yours to make. I have tried to list
just a few things to think about. As always it is important to check your
bank rules.
Again I would like to remind you that other places (i.e. hotels) may
routinely place a hold on funds whether on Check Card or Regular Credit
card. It is important to know that these funds are NOT available to be used
for anything else during the duration of the hold.