We have the opportunity to offer you a few questions and answers about the Visa debit card. We got to learn a few facts about it, as Visa is one of our site sponsors over the next few months.
Visa Debit Card Options
For those of you looking for a Visa Debit Card, here are a few options you can consider:
- AccountNow Prepaid Visa: Here’s a checking account alternative that allows you to borrow money and build credit history. Technically, this is not a credit card, but if you set up direct deposit on your prepaid account, you may be eligible to receive a line of credit. There’s FDIC insurance up to $100,000.
- Vision Premier Prepaid Visa: With this card, you’ll get free direct deposit, free online bill pay, card balance alerts and the ability to withdraw cash at ATMs.
- All-Access Visa Prepaid Card: You can use this card as an ATM card and make purchases anywhere it’s accepted. There’s also some safety features built in: Visa will replace any stolen cards and will protect you from unauthorized transactions. Some other great features: free direct deposit, no bank account needed, FDIC insurance, 24/7 account access, additional cards, unlimited reloading options, bill pay via your card, and a referral program!
- Prepaid Visa Rushcard: Use this card to avoid check-cashing fees with free direct deposit. You’re also protected by Visa’s Zero Liability Policy. Other great features: bill pay and purchases online or over the phone, ATM access, access to your account via text alerts, 24/7 online access and customer service. Optional features: it can help you build credit by reporting your regular bill payments to credit reporting agencies.
- Wired Plastic Prepaid Visa Card: a nice standard Visa debit card.
Photo by Asim
Visa Debit Card Facts
Here are some common questions cardholders have about the Visa debit card that we’d like to share with you. You’ll see Visa’s responses below, and my thoughts on these issues.
1. Using the debit card will cause a hold to be placed on your bank account.
Question: A common complaint about debit cards is that when you swipe them at the pump, the bank typically places a hold on your account for as much as $50-$75, no matter how little gas you buy. Unfortunately, it can take several days for the hold to be removed, potentially resulting in overdraft fees when you really do have enough money in your account to cover your expenses. Is this a common practice across banks/card issuers? Do you foresee a day when this problem will be rectified?
Visa Answers: When you go to pump gas and swipe at the pump, you may get a hold on funds in your bank account. Some financial institutions that issue Visa debit cards decide whether to place that hold on your funds in order to protect themselves against the risk that you could spend more money than you have in your accounts. As a precautionary method, they place this hold in anticipation of the final transaction amount. The hold, which is typically a higher amount than the cost of the gas, is what allows you to use your Visa cards in places like gas pumps where the exact amount of a transaction may not be known and when the merchant first requests an authorization for a purchase.
To clarify, Visa does not determine the hold — that’s up to the financial institution. But financial institutions are required to release all holds within three business days of the authorization request or when the transaction clears, whichever is earlier.
My Take: I believe this policy makes sense, as we’re talking about small amounts of money here. To avoid overdraft fees you can do a few things:
- Be aware of how much money you’ve got in your bank account. Balance your checkbook and be in the know!
- Create a buffer in your account. For instance, if you designate $100 to be your “cash cushion”, then never dip below that amount. Stop spending before you reach that point.
- Know more about your bank’s overdraft fees and policies.
- See if your bank’s overdraft protection program is worth signing up for. Evaluate the cost of this program vs the fees that you could otherwise incur.
- Opt out of overdraft fees (it’s actually optional, and a way to protect you from yourself, but the alternative can be worse)!
More details on how to sidestep overdraft fees right here!
2. Debit card statements are usually made available.
Question: Do you still get a statement with a debit card or does it simply hit your bank account?
Visa Answers: This varies by financial institution, but most issuers make debit card statements available online, via mail and/or by phone so that consumers can check their account transactions often, even daily.
My Take: I’d imagine that a statement that details our money usage is something we should always insist on receiving. Without one, I’d feel like I was flying blind with my money (unless I track every penny on my own, which I don’t; I don’t think manual penny tracking is a common practice among consumers, I’m sure 😉 ). I’d expect some kind of statement to cover all my financial transactions that don’t involve cold, hard cash.
A parting thought: just like any other financial tool, it goes without saying that before signing up for a debit card, you’ll need to review its points and features to see if it fits your specific needs and requirements.
Copyright © 2008 The Digerati Life. All Rights Reserved.
{ 16 comments… read them below or add one }
While Debit cards are cool in a lot of ways, there are a couple which drive me nuts. You don’t get the same fraud protection as a traditional visa card. Second, if you push the wrong button at a register (debit/credit) you get charged in a lot of places for the transaction. Third, Debit cards don’t go on your credit history. This might not be a problem for some, but it really sucks for older folks who have paid off their houses and use debit cards instead of credit cards. Imagine you want to get a AMEX or buy a TV with one of those “low down payments with no interest” and your credit score is 000. That is horrible, no matter what your standing is with savings, you are just trying to save some $ but cannot because you have not credit history.
These are definitely great talking points Drew. I guess you’d really liken a debit card to a “cash alternative” card such as an ATM card really. Or maybe it’s more like an electronic check. If I were to compare it as a tool to other cards, I’d do the apples to apples thing and compare it to a cash card (with its own set of pros and cons).
Credit cards are a great tool if you are good at managing debt. I use credit cards for the purpose of building credit, getting fraud protection and the rewards primarily. I agree with you totally on these advantages of credit cards over all the other types of cards.
These are definitely things to think about before applying for any of these cards.
I have to say I don’t see the benefit to debit cards, they are like cash but worse. You can get extra charges. Also the retailer gets extra charges. While I can see the benefit of not having to carry around cash, we already have a solution for that – a credit card. And you get extra fraud protection. Plus you don’t have to pay for a month or more. The only time I can see it really making sense is if you are carrying a balance on the credit card you would use and you don’t have cash. But in that case- pay off your credit card balance 🙂
Thanks for your thoughts on this Curious Cat. I know people who do use a debit card, but I guess it is all for convenience. The tradeoff for that convenience seems to be security (among other things).
Of course you have to do your pros and cons of any financial transaction. I was just pointing out some other things 🙂
Definitely fire away! 🙂 I appreciate the interesting discussion your opinions bring forth. Thanks Drew!
As a huge debit card user these are nice questions to have answered. Makes things a little bit more reassuring and didn’t realize the company holds the funds when making purchases. Do you recommend purchasing with debit or credit? Or doesn’t really matter.
I love VISA, I had a VISA debit card for about 10 years from my credit union and had no problems. Good fraud protection and car rental places only placed a hold for about 2 days
I recently posted a video comparison between debit card, credit card and charge card at http://credit-card-videos.blogspot.com/2008/12/credit-card-vs-debit-card-vs-charge.html
Great article!
I submitted it to BankFiesta.com to share with others, hopefully will get you some additional visitors too.
Cheers,
dealman
Debit Cards are cool, but Cash Back Reward Credit Cards are cooler if you pay your balance every month. you can get 1-5% back on all your purchases.
Using a Visa debit card rather than a credit card offers significant gains. A prepaid Visa debit card can actually reduce the amount consumers spend whenever they shop. Even those have difficulties in managing their accounts can cut back on their expenses choosing Visa debit cards over credit cards.
Does a visa debit card help me to build up credit? Just moved to the USA and not able to get a credit card because no credit history. Thanks for the information.
Inge,
I don’t believe so. I got this info from a Yahoo! Answers page:
Unfortunately most “prepaid” or debit cards don’t help you establish credit. You may want to start with secured credit cards which are similar to prepaid cards in that money has to be placed on the cards for it to be used, but with secured credit cards, whatever’s spent on the card has to be repaid just like a regular credit card. These cards can help you build credit but require a deposit that’s used as collateral to get you a credit line of the same amount. For example you place a deposit of $250 as collateral, you get a $250 credit line. From there, it works like a regular credit card.
Debit cards are great because they help keep your spending within limit. The tendency to splurge or charge excessive expenses to your card is avoided because you can’t borrow more than what you have loaded onto your card. If you have trouble controlling your spending habits, let debit cards help you.
What burns my a$$ is that when you make a purchase with the debit card (maybe credit card too), the funds are immediately withdrawn from your account. But, if you cancel the transaction it takes 30 days for the funds to be put back into your account. Sorry folks, something is crooked here.