Thursday, March 27, 2008
A Word to the Wise
Why Debit Card use at Gas Stations can lead to Overdrafts
Reported by John Matarese
Viewers often ask me if there's really much difference between a debit card and a credit card...besides he fact that a credit card sends you a bill and a debit card takes the money now.
Yes, there is another difference --- concerning your cars gas tank --- and it can be an expensive difference!
Lindsey Grey recently learned it the hard way, when she needed gas for her car.
Since she had her daughter with her, she decided to just swipe at the pump.... and not go in to pay cash
She says "I used my debit card for the convenience factor."
With 75 dollars in her account, she bought 10 bucks worth of gas, and assumed she was fine. But....
She says "a couple of days later I checked my account to see what I had available realized I had bounced a couple of things, and was hit with some 27 dollar fees that shouldn't have happened." Why the overdraft fees?
"The gas station put $50 on hold on my account," she explains, "when I had only spent $10. So by holding the $50, other things were bouncing."
Why does this happen?
The US Public Interest Research Group says more and more gas stations will place a 50 dollar "hold" on your account if you swipe a debit card at the pump.
They do it to make sure you can pay for your fillup, in these days of high gas prices.
But USPIRG says the bank may not unfreeze the money for 2 to 3 days... which can lead to bounced checks!
Don't let this happen to you
I'd make sure I had 100 dollars in my checking account before using a debit card for gas these days. Otherwise, use credit, or pay with cold hard cash so you dont waste your money.
Lindsey paid almost $100 for $10 of gas...And says she'll never do that again.