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ON BY Ken Tumin
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:
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:
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.
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.