All Debit Cards Are Not Created Equal

January 2, 2013

In my recent post on Life Without Credit Cards, I discussed the advantages of using a debit card instead of relying on credit cards. If you choose to rely on a debit card, it is important to remember that all debit cards are not created equal.

Most banks issue debit cards to their account holders at no additional charge. However, some consumers are unable to open a traditional checking or savings account.

In this instance consumers may turn to the myriad of companies that offer prepaid debit cards. Some of these prepaid debit cards come with very high fees. Who wants to pay a fee just to confirm how much money you have? If you are considering a prepaid debit card, this is certainly a case of buyer beware.

Before choosing a prepaid debit card, it is critical to read the cardholder agreement. The cardholder agreement outlines the fees the company can charge.

Of the prepaid debit cards currently on the market, my favorite is the Bluebird Card offered by American Express. It is one of the few cards that does not charge a monthly service fee. There are other benefits such as Purchase Protection and Roadside Assistance.

For reviews and a comparison of popular prepaid debit cards, visit 2013 Best Prepaid Debit Cards Comparisons and Reviews.

There is life without credit cards

December 18, 2012

Potential bankruptcy clients often insist that a credit card is necessary to survive in today’s society. In 2007 I closed my only credit card account, just to see if one could really survive without a credit card. What I discovered is that it is very possible, however sometimes it requires some advanced planning.

Relying on a debit card for travel is where I found the greatest challenge. There are several car rental companies that insist on the use of a major credit card to rent a car, however there are many who do not.

I recently traveled to Los Angeles to attend a conference. I rented a car through Hertz and they had no problem accepting my debit card. I have had the same success with Thrifty, Budget and Enterprise. It is important to remember that they will put a deposit on the card, which reduces the available cash until several days after the car is returned.

Debit cards come with a daily limit, regardless of how much money is in the account. It is important to make sure that the deposit charged by the car rental company doesn’t impact your ability to check into a hotel the same day. The way I have managed this is to pay for the hotel in advance through sites like Expedia or Travelocity. Hotwire is the only site I found which will allow the payment of the car rental (not the deposit) in advance of travel.

There have been times when I needed to purchase something which exceeded my daily limit. That involves a phone call to the bank to let them know how much I needed to charge. I have never been turned down for a temporary increase for a specific purchase.

Since I began relying on my debit card for holiday shopping, my holiday spending sharply decreased. Credit spends far too easily. It hurts to spend cash.