The shopping season is approaching and many consumers are choosing to use their debit cards instead of a credit card this Christmas season. But despite their apparent safety, there are a few precautions you need to take to make sure that you don’t end up in credit card debt despite avoiding credit cards this Christmas.
Keep close track of your spending. While debit cards are a lot better than credit cards in terms of avoiding interest, fees and debt that you need to repay, debit cards have their own set of pitfalls, including pain-free spending. If you carry cash it can be quite painful to part with it when it comes time to pay for a purchase. As with credit cards and debit cards, just swiping a card makes spending money less painful causing you to spend more. To avoid spending too much on you debit card, keep a running tally of what you are spending as you go from store to store.
Opt-out of overdraft “protection” programs offered by your bank. As we have mentioned before overdrafts can end up costing consumers more than what the price of the original purchase. The average overdraft price tag was $34 in 2008. To avoid spending as much as twice what you paid for an item, don’t allow you bank to “protect” you with their overdraft program, just simply opt-out. Note: The Federal Reserve has created new rules, effective July 1, 2010, which will prohibit banks from charging overdraft fees on automated teller machine and one-time debit card transactions unless the consumer opts in to the overdraft service for those types of transactions.