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Fees for PIN-Based Debit Card Purchases


Many reward checking accounts require you to use your debit card with the credit option (non-PIN or signature-based) when making purchases in order for them to count toward your monthly usage requirement. Some banks and credit unions will actually punish you if you use the PIN option with your debit card. GTE Federal Credit Union is one of these. A reader just sent me this link to their new debit card policy along with the following review of this situation:
GTE Credit Union announced that they will begin charging customers 25 cents for every debit transaction made using the pin number starting 11/16/09. This is the total opposite of most banks which are rewarding their customers for paying with their debit card and using their pin number. GTECU advised that their customers can use their debit card but should sign as a credit card (customer's signature) and must not use their debit pin to avoid the 25 cent fee. A CSR at GTECU said that the bank is enforcing this as a way to make more money. To make customers feel good about this inconvenience, they are offering their customers "Reward Points". If a customer swipes their debit card using their pin an average of 50 times per month - the monthly fee would come to come to $12.50. GTECU is currently offering some of the lowest CD rates in the nation.

The consumer advocate, Clark Howard, provides an example of how much more profitable the credit option is to banks in his show notes from 2007:
If you go for credit, the merchant will pay $1.50 in processing fees. If you opt for debit, the merchant may only pay 17 or 18 cents. So the merchants are always battling with the banks over the use of these cards. Sometimes the banks will even assess you a fee when you select the debit option for a purchase.

I'm sorry to see a credit union following banks in assessing fees when you select the debit option.

If you don't have a reward checking account, I'm not sure why one would use a debit card instead of a credit card. I know many have not opened reward checking accounts due to the additional risks of using a debit card. If you're in this camp, you may be interested in disabling the 'debit' feature of your debit card so it'll just operate as an ATM card. Clark Howard describes how to do this at this page. If your bank only offers a debit card and not a pure ATM card, this may be an option to consider.

Thanks to the reader who sent me this info on GTE FCU.

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Anonymous   |     |   Comment #1
For security/liability and fee-avoiding, just use "credit" instead of "debit" from now on. Easy one.
cwm.icc   |     |   Comment #2
another implication is no more 'free' cash-back at point-of-sale?

hopefully the pin transaction fee will be far less than the foreign-ATM transaction fee.
Rick   |     |   Comment #3
Last week at the supermarket I selected "Credit" with my rewards checking debit card and the machine asked, "Do you know your pin?" I selected "No" and the credit transaction went through. Never seen this before.

If you are charged for debit transactions it is time to find another credit union.
Jo/GaelicWench   |     |   Comment #4
Rick says: "If you are charged for debit transactions it is time to find another credit union."

I strongly concur here. Credit unions are supposedly "owned" by its members. Why would they allow such a fee, unless it is put to a vote and for members to voice that vote.

I use the signature option 99.9% of the time when using my debit card. I try not to memorize my pin so I am essentially forced to sign my card. Safer, and less chance of fraud. I don't, however, want to be forced to use it, incurring a fee if I need to get cash back. On the plus side of this, it is still much cheaper to get cash back at the POS than it is out of a "foreign" ATM.
Anonymous   |     |   Comment #5
Pin number? Isn't that kind of redundant?

Well there is a charge for using another bank's ATM machine.
Bob   |     |   Comment #6
The whole idea behind debit cards was that they were supposed to save the bank money vs. processing paper checks.

Charging for debit card using is a little obnoxious.
Anonymous   |     |   Comment #7
One debit card from a reward checking account required that I use it as "credit" -- now another reward checking account requires that I use the card with my PIN as debit -- hopefully they won't start charging me for doing such.
Anonymous   |     |   Comment #8
GTEFCU is in trouble.

"Beginning Wednesday, November 4, regular branch hours on Wednesdays will be 12:00 noon – 5:00 pm for all branches except Crystal River, North Ocala and Downtown Tampa, which will remain open from 8:00 am – 5:00 pm on Wednesdays."

"TAMPA, Fla. (July, 15, 2009) -After extensive due diligence, Suncoast Schools Federal Credit Union and GTE Federal Credit Union have elected to terminate merger discussions."
Anonymous   |     |   Comment #9
I've never used a debit card to buy anything. Many of my ATM cards are also debit cards, but I don't bother disabling the POS feature since I never used it in a store. It functions only as an ATM card only. But this debit vs. credit billing on the debit card is all about transaction fees asessed against the merchant. They can add surcharges for use of this feature like many merchants have done to credit card users.
Anonymous   |     |   Comment #10
I can't believe this institution has the balls to call itself a Credit Union. They should cross off the Credit Union portion of their name and just call themselves GTE National Bank because that is what they are operating as - a scum sucking, fee-issuing, money-grubby, BANK!
Anonymous   |     |   Comment #11
If there was fool proof way of disabling the POS function, I would do it on all my debit cards. But the problem is I bet every CS rep from a bank would have different answers (because most likely this is completely new to that person and they don't even know where to look up to find that info) and even if the rep somehow acknowledge that it's possible, they would make mistakes and change something completely wrong to mess up your account.

And how do you even verify that debit function has been disabled correctly? By using the very debit function you want disabled? I don't even know if it's working today since I've never used it before. So first, I would have to use it to make sure it is working, exposing myself to all the risks related to using debit. (otherwise, it's not possible to verify that it's not some other problem at the POS) Then have it disabled by a human more likely to make mistakes at this than not. Then I'll have to try to use it again to make sure it is disabled. Then I'll have to verify ATM function is still working by using it at ATM.

Very counter intuitive.
Donald   |     |   Comment #12
I work in a small retail store. Recently a customer used her debit card for a purchase. During the transaction she discovered she had a coupon for $15 off. She asked that the transaction be voided and re-rung. She called later to complain that her bank showed both sales having gone through but not the voided transaction. This was all her bank's doing; they did not register the voided transaction for 3 days. She called us every day to complain, and for all I know we may have lost a customer thanks to her stupid bank!
Kevin H
Kevin H   |     |   Comment #13
GTE IS FAILING. Loss of $33 million this fiscal year. Nickel and dime fees for everything. Closing branches. Reduced hours.

I asked for financial reports from a 3rd Level CSR on the phone, but they refused to provide them. However, they knew enough to point me to the NCUA site. I found the report. With a $33 million loss, it's no wonder they don't want us to see it. I had to find the report myself. My wife was told by a CSR that WE PAY FOR that they would rather charge a fee than have my business.

Look it up yourself. GTE is NCUA charter number 196.


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