debit cards

6 Easy Ways to Protect Your Debit Card From Skimmers

Dr Penny Pincher — Wed, 18 Apr 2018 08:30:09 +0000

You've no doubt heard news reports about debit card skimmers being found at certain retail or banking establishments. Card skimmers can be installed at ATMs, restaurants, gas payment terminals, and even store check-out lines. The phony equipment is small and can be hard to spot. Some card skimmers even include a phony keypad that fits over the real one to steal your PIN.

Your debit card account number can be stolen if you swipe your card in a skimmer. Unlike credit card transactions, debit cards may not offer much protection against fraudulent purchases. Your checking account could be emptied, and you might not be able to reverse the charges.

Your best defense against debit card skimmers is vigilance and awareness. Here are a few ways to protect yourself.

1. Spot a skimmer before you swipe

When using a card terminal, look it over before you swipe. It can be difficult to spot a well-hidden skimmer, but some clues can help.

If the terminal you are about to use does not match the other ones at the location, you might be looking at a skimmer. Number pads that look mismatched or are an odd size are a red flag. Press on the card receiver and wiggle the keypad; skimmers are designed to be retrieved quickly by thieves and may have loose parts. A keypad that is sitting on top of the machine rather than flush with the surface of it can also be a sign of a skimmer. If you're at a gas station, look at the card scanner at the pump you're about to use; ensure that the security tape is still intact over the panel before you insert your card.

When you're choosing a payment terminal or ATM, go for one that is close to store employees, a security camera, or is in an open and well-lit area. These are less likely to have been tampered with by thieves that do not want to be noticed. (See also: 10 Tips to Save You from an ATM Skimmer)

2. Dip, don’t swipe

If you have the option to insert your card into the payment terminal rather than swipe, do that. Chip cards, otherwise known as EMV cards, are much more secure since they do not pass your actual account numbers to the retailer. Even if someone steals the numbers from an EMV transaction, it is not useful to thieves since a unique number is generated for each transaction.

Some stores have not yet adopted chip readers and will still ask you to swipe your card through a magnetic card reader. If you swipe your debit card instead of dipping it, you risk your account information to skimmers. Some thieves have taken to "shimming" rather than skimming; tampering with chip reader machines by installing a paper shim to block the chip reader, forcing people to swipe their cards instead. If in doubt, pay with cash. (See also: 4 Ways Chip Credit Cards Make Life Easier)

3. Don’t let your debit card out of your sight

At restaurants, the normal payment procedure is to give your debit or credit card to the waitstaff who takes it away to swipe it. If you hand your debit card to someone else to process, they can run your card through a second card reader and steal your information. Or, someone could simply write down your account number and the security code from your card and use it for fraudulent transactions. The best security practice is to never let your debit card out of your sight and pay for your restaurant meals with cash.

4. Monitor bank statements

You can monitor your bank statements regularly to spot suspicious activity early in case a criminal does get your account information by skimming your debit card. If you do find fraudulent transactions, work with your bank to close your account right away and minimize your losses. Your bank may offer automatic account alerts to make monitoring your account easier.

5. Withdraw cash at the bank, not the ATM

I prefer to withdraw cash at the bank a couple of times a month instead of stopping by an ATM every time I need cash. I show my driver’s license at the bank to make a withdrawal — no debit card is required. Not only does getting cash at the bank eliminate the risk of debit card skimming, but you avoid any ATM fees as well.

6. Pay with a credit card instead of debit card

Of course, the best way to protect your debit card from skimmers is not to use your debit card. It is safer to use a credit card for transactions since credit cards offer protection from fraudulent purchases. If you don’t want to pay interest to use a credit card, simply pay off the credit card balance every month. Using a credit card provides a barrier between your checking account and thieves who could skim your account information from your debit card. (See also: 4 Reasons Credit Is Safer Than Debit)

Another option is to pay with cash to avoid the risk of skimming altogether. I use an envelope budgeting system and pay for all food expenses with cash. This greatly reduces the number of card transactions I make each month, and therefore reduces my risk of having account information stolen by a skimmer.

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This article is from Dr Penny Pincher of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Interest Rates Are Rising: Here's Where to Keep Your Cash

Philip Brewer — Wed, 11 Apr 2018 08:30:05 +0000

These past 10 years, interest rates have been so low it just about didn't matter what you did with your cash. There was a certain convenience to that — you didn't have to move money back and forth between checking and higher-rate accounts, because they paid almost the same. As a bonus, you didn't have to track money market returns to be sure the rate your account paid was still competitive, because they all paid just a fraction over 0 percent.

That has changed. The Fed has already started raising interest rates, and will probably raise rates another three-quarters of a percentage point this year. Already, rates are high enough that it makes a difference where you hold your cash, and that difference is starting to get significant. (See also: How to Benefit From Rising Interest Rates)

Let's take a look at where you should be holding your money, as well as a few reasons why you need cash on hand.

What cash to hold

There are four main reasons to hold cash: liquidity balances, planned expenses, temporary holdings, and an emergency fund. The size of your temporary holdings may vary quite a bit from time to time, but the others have pretty specific parameters that it's worth being clear about.

Liquidity balances

Your income arrives in chunks that don't precisely match the due dates of your bills. Liquidity balances are the cash you keep on hand to smooth that out, so that you can pay each bill when it's due. Sizing the cash demands of your liquidity balances is easy: It's the total of all the bills that might come due between income payments. Once you know this amount, you can set it aside for when you need it.

Planned expenses

Everybody has some expenses that are not regular monthly bills, but are nevertheless known in advance. Some of these are regular, they're just not monthly: tax payments, insurance premiums, tuition payments, etc. Others are irregular, such as discretionary payments on things like home improvements, airfare for your vacation, buying a boat, etc. Regular or irregular, if there's a near-term payment to make, it's good money management to hold some cash to pay it.

Temporary investments

Sometimes you have cash that you've decided to invest, but that you aren't ready to invest yet. Maybe you don't know exactly where the money should go until the next time you rebalance your portfolio. Maybe you expect market conditions to improve. Maybe you're accumulating money to meet the minimum balance of some fund. Whatever the reason, until you're ready to invest, you're holding the money as cash. (See also: How the Risk Averse Can Get Into the Stock Market)

Emergencies

Your emergency fund is cash set aside to handle a financial crisis — a job loss, a medical bill, a home repair, etc. Having the money on hand means that you won't have to turn to credit cards or other forms of debt to get through your emergency. Experts often recommend an emergency cushion of three to six months' worth of daily living expenses. Your unique situation — such as an expensive medical condition or a high-paying job that would be difficult to replace — may call for a larger fund. (See also: 5-Minute Finance: Start an Emergency Fund)

Where to hold your cash

In the U.S., we have a complex history of rules related to ceilings on the rates banks can pay, special exceptions to those rules, and free-market efforts to get around those rules. There are a lot of different kinds of institutions that hold cash and a lot of different kinds of accounts available at one or another of those institutions.

Whatever sort of institution you choose, you still need to figure out what sorts of accounts to use for your cash. Here are the usual suspects.

Checking accounts

For most people, a checking account is their main gateway into the banking system. Their paycheck is direct deposited into their checking account, and most of their bills are paid out of their checking account.

Back in the 1980s and 1990s, banks had to pay reasonably competitive interest rates to pull in money to support their (highly profitable) lending. That became less and less true in the early 21st century, until the financial crisis put an end to it. At the moment, checking accounts pay so little interest that you might as well just ignore it.

That doesn't mean you shouldn't have a checking account — it's just no longer where you should hold your liquidity balances or your cash to cover planned expenses, until just a day or two before you need to make a payment. (See also: 9 Common Mistakes You're Making With Your Checking Account)

Reloadable debit cards

These are a relatively new invention, created for people who don't need (or can't manage) an ordinary checking account. As the name suggests, it functions as a debit card. There is usually some limited ATM access and some sort of bill-paying feature.

Once little more than fee-generating boondoggle for the banks, rule changes made them pretty fair for consumers a few years ago. Since these new rules went into effect, a reloadable debit card had been a reasonable place to hold your cash balances when rates were low, but now that interest rates are going up they're only reasonable for people whose circumstances make a bank account impractical.

Savings accounts

It used to be that you opened a savings account even before you opened a checking account. Now an ordinary savings account is almost pointless. At least at my bank, a savings account pays the same minuscule rate as a checking account, so I might just as well leave my excess cash in my checking account.

When you think about savings accounts nowadays, though, you're usually not thinking about a savings account at your local bank. You're thinking about an internet savings account. (See also: 6 Important Things to Look for in a Savings Account)

Internet savings accounts

These are just ordinary savings accounts, except they're at a bank that's willing to pay up to get your money, and that offers a convenient web interface for moving money to and from your checking account. The money moves by ACH transfer, typically in two or three days. This is quick enough to make these accounts very useful as a place to hold your cash.

Unlike a lot of other kinds of financial accounts (where the terms and conditions vary in complex ways), the terms and conditions of internet savings accounts tend to be relatively standard, making it easy for savers to compare one account to another and pick the one that offers the best deal. (See also: 5 Best Online Savings Accounts)

Money market funds

Money funds are a legacy of 1970s interest rate regulations. They pool money from shareholders, invest it in short-term securities, and share the return. Because they just share whatever return they get, returns go up quickly when interest rates rise. (Unlike savings and money market accounts, where banks that already have your money won't raise rates until they have to.)

Although very safe, investments in a money market fund are not guaranteed. In fact, one money market fund lost enough money during the financial crisis that it was unable to make investors whole. That prompted major players in the money market to simultaneously all try to get out of assets with even the slightest risk. Basically, that was the financial crisis.

Money market accounts

Created in the early 1980s as a carefully carved-out exception to interest rate regulations, money market accounts were created in a way that didn't cannibalize on checking or savings accounts (basically, they only allowed six withdrawals per month and only three of those could be by check). They had advantages over a money market fund: They paid an announced rate (instead of just whatever the fund could earn in the market), they were guaranteed to pay off at 100 cents on the dollar, and they had FDIC insurance. That's all still true. (See also: Money Market Accounts: Ideal for Emergency Funds)

Other possibilities

There are a lot of other places you might hold cash for the short term: Demand note accounts (basically an IOU from a major financial corporation packaged up like an internet savings account), cash management accounts (a money fund or money market account wrapped up inside a brokerage account), CDs, and Treasury bills.

Bottom line

It no longer makes good sense to just keep your money in your checking account — the simplest version of cash management. Now that you can earn a return that's more than a fraction above zero, the time has come to manage your cash more actively.

Simple, but not too simple

The easiest version of active management is just to shift most of your liquidity balances, near-term planned expenses, and temporary investments into some sort of higher-yield account.

Just do this: When your paycheck (or any other money) arrives in your checking account, transfer most of it to your higher-yield account. Two or three days before your bills need to be paid, transfer the necessary amount of money back to your checking account.

Not so simple

If you're into this sort of thing, you can get as fancy as you want.

If your finances are sufficiently under control, you can skip the step of having your income enter via your checking account only to be transferred to your higher-yield account. Instead, you can arrange to have your direct deposit go straight into your high-yield account. That gets you earning your higher yield a couple of days earlier, and potentially cuts the number of transfers you need to make in half.

Especially for expenses with due dates that are well-known but further off than this month, it may make sense to do something with CDs or Treasury bills.

It may be more convenient to keep your temporary investments closer to where the investments are going to be held — perhaps in a money market fund in the same family as the other mutual funds you hold, or one with your brokerage firm.

The possibilities are endless. But the time for just leaving your money idle in your checking account has ended.

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This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How the Fair Credit Billing Act Protects You

Susan Johnston Taylor — Fri, 26 Jan 2018 09:30:19 +0000

Ever spotted a billing error on your credit card statement? Perhaps a merchant charged you the wrong amount, or charged your card for something you never authorized or never received. The Fair Credit Billing Act (FCBA), which was enacted in 1974, has provisions designed to protect consumers. Its protections can apply in cases where someone else uses your credit card fraudulently, when a merchant fails to deliver goods as promised, or when a credit card issuer improperly applies payments.

There are a few areas the FCBA definitely doesn't cover. If you run into issues involving a debit card, that would fall under the Electronic Fund Transfer Act, not the FCBA. Business credit cards and installment loans such as car loans or student loans also fall outside of the FCBA.

Most other billing errors on credit card bills do fall under the FCBA. The law also protects you if you have an open-end loan, such as a line of credit. It helps to know your rights and how you can exercise them. Here's how you're protected under the FCBA.

You have the right to dispute billing errors

The FCBA defines billing errors as any of the following:

Charges you did not make. The FCBA limits your liability to $50 per unauthorized charge (but all the major credit card networks have zero liability policies for unauthorized transactions, meaning you usually won't pay a cent anyway).
Charges with the wrong date or amount.
Charges for goods or services you did not receive.
Charges for goods or services that were significantly not as described.
Charges for goods or services that were not delivered as agreed or were received damaged.
Charges made after you canceled a contract with the merchant.
Failure to reflect payments or credits to your account (for instance, if you return something and you're not credited for the item).
Failure to send bills to your current address (as long as the creditor has your change of address in writing at least 20 days before the billing period ends).
Math errors.

Check credit card statements regularly

Many credit card issuers have become more vigilant about fraud since consumer data breaches ramped up a few years ago. For instance, some card companies will contact customers about suspicious activity or allow card holders to temporarily "turn off" a lost card, rendering it inactive for a period of time. (See also: How to Protect Your Credit After the Equifax Breach)

Still, credit expert John Ulzheimer, formerly of FICO and Equifax, says consumers should keep monitoring their accounts and know their dispute rights under the FCBA. "Consumers should be cognizant of credit card fraud," he says. "It limits the inconvenience" if you can detect fraud early.

Before you file a dispute with your credit card issuer, contact the merchant and try to resolve the error with them. You might discover that you actually did authorize the charges. For instance, maybe you signed up for a subscription without realizing that the terms of service included auto-renewal in the fine print. Or perhaps you don't recognize the name of the company but it's actually the parent company of a vendor you did authorize. Your credit card issuer wants you to eliminate these possibilities before they get involved. (See also: How to Win a Fraud Dispute With Your Credit Card Company)

Dispute billing errors promptly

If an error isn't resolved or explained by the merchant, send a dispute letter to the creditor. "You have to go and look on your invoice or monthly statement to find the address where they want you to send billing inquiries," says Sonya Smith-Valentine, president of Financially Fierce, LLC and a former managing attorney with Valentine Legal Group, which handled financial and consumer protection litigation. "It's not the address where you send your payment."

Be sure your letter includes your name, address, account number, and a description of the billing error. You can use the FTC's sample dispute letter for help. You need to file your dispute within 60 days after the first bill with the error was mailed to you, so time is of the essence. If you discover several months later that you're still being billed for a subscription you thought you canceled, you may not be able to recoup all of your losses.

"All of these things are unfortunately specified in the law so that if you make a mistake, you no longer get the protection [of FCBA rights]," Smith-Valentine says. Creditors may still resolve things in your favor if you file your dispute late or mail the letter to the wrong address, but they're not obligated to do so.

Many credit card companies now give you the ability to file a dispute via their websites or mobile apps. The Federal Trade Commission, however, recommends sending a letter by certified mail and requesting a return receipt so you have proof that the creditor received your dispute letter.

Along with your letter, include copies (not originals) of sales slips or other documents that support your dispute. For instance, if you returned an item that the merchant says it never received, you might include a shipping receipt with a tracking number showing the item was, in fact, returned. Also keep a copy of your dispute letter and any supporting documents for your own records.

You can withhold payment on the disputed amount during the investigation

"Once you contact your credit card company, they've got 30 days to acknowledge that they received your letter, and two billing cycles to resolve the problem," Smith-Valentine explains.

While your credit card company investigates the item(s) you've disputed, you don't have to pay unauthorized or erroneous charges. Even if you don't pay for these charges, the card company cannot threaten your credit or report you as delinquent during their investigation. However, you must still pay other outstanding balances on your credit card. This includes interest not related to the amount you've disputed. (See also: Dealing With Nasty Debt Collectors)

If an error was made, you're entitled to a refund

Once the investigation is complete, if the creditor finds there was an error, it must explain to you in writing how it will make things right. It must also credit your account for the incorrect amount and remove all finance charges, late fees, or other charges related to the error.

If the investigation determines that you only owe part of the disputed amount (for instance, maybe part of your online order never arrived but other items did), the credit card company must send you a written explanation. You are also entitled to request documentation proving that you owe that portion of the disputed amount.

If you're found in the wrong, you're entitled to an explanation in writing

If the creditor determines your bill does not contain any errors, on the other hand, it must notify you in writing about how much you owe and why. You may request copies of relevant documents as proof. In addition to the disputed amount, you'll also owe any finance charges that accumulated during the dispute process and possibly the minimum amount you missed due to the dispute.

Still not convinced you owe money as the creditor claims? Write to the creditor within 10 days after receiving its explanation, and state your refusal to pay the disputed amount. The creditor may begin the collections process, but if it reports you as delinquent to a credit reporting agency, the report also must state that you don't agree that you owe the money.

If the lender fails to follow these settlement procedures, it may not collect the amount in dispute or any related finance charges, up to $50, even if its investigation reveals that the bill was correct. If, for instance, the credit card company threatens to report your nonpayment (or actually reports it) during the dispute period to the credit bureaus, it wouldn't be able to collect the amount it says you owe. (See also: How to Read a Credit Report)

You're entitled to have your payments applied to your account in a timely fashion

The FCBA requires credit card issuers to send you a statement at least 21 days before your payment is due — meaning, before the grace period expires. For open-end credit (such as a line of credit), the rules are a little different. A lender must send your bill at least 14 days before a minimum payment is due.

The law also requires that your payment be credited to your account on the day it was received. However, creditors can set a reasonable cutoff time for payments to be credited on the same day. The earliest cutoff time allowable is 5 p.m. on the due date, so payments made after the cutoff time would be credited to your account on the following business day. Note, however, that the creditor can decide in which time zone that cutoff time falls. So if it says your payment is due at 5 p.m. Eastern time, but you live in California, you'll need to submit your payment online before 2 p.m. Pacific time.

In addition to these rights, credit card companies have to give you a written notice of your right to dispute billing errors whenever you open a new account and periodically over the life of that account.

You can sue creditors who violate your rights

You can sue a creditor who infringes on your rights under the FCBA, and you may be awarded damages if the court agrees that the creditor violated your rights. "The damages usually are twice the amount of any finance charges as long as it's between $500 and $5,000," says Smith-Valentine. (Damages can be even higher if the creditor has a history of violations.) "These aren't high dollar amounts, so you're not gonna walk away a millionaire, but your problem will get resolved," she adds.

In some cases, the creditor may be obligated to cover your legal costs in addition to paying damages. "A lot of times attorneys who will take the case won't charge you because they know they can get the court to pay your attorney costs," Smith-Valentine says.

Not comfortable going to court? You may not have to. "More often than not, [these issues] get resolved before going to trial," Smith-Valentine concludes.

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This article is from Susan Johnston Taylor of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

6 Reasons to Love Your Bank

Elizabeth Lang — Mon, 27 May 2013 10:24:33 +0000

No one likes banks these days. The media is telling us that they are charging more fees and are to blame for the financial crisis. But the reality is that now is the time to love your bank more than ever.

Imagine that a security company guarded your house around the clock. If a burglar ever broke in and stole something valuable, like the family silver or your TV, your security company would replace them, no questions asked. You can come and go into your house as you please and even contact the company guarding your house around the clock — in person, by email, by phone. And sometimes, the company will even pay you for the privilege of guarding your house. (See also: Think Twice Before Ditching Your Current Bank)

This is similar to what a bank does for your money.

1. Your Bank Keeps Your Money Completely Safe

The nuts and bolts of banks, as the average consumer uses them, is that you give your money to your bank, and your bank protects it. The very best reason to use a bank is that you don't have to worry about your money getting lost or stolen. Keeping it under the mattress is not the best bet. In the unlikely event your bank fails, the government insures your deposits up to $250,000. If you like any other company that provides similar services (insurance, for instance), then you should like your bank.

2. Your Bank Provides Amazing Services

Besides just protecting your money, your bank also provides amazing services. Your bank gives you the ability to pay for something nearly anywhere you want by using a debit card. You don't have to carry around cash (and risk it getting lost or stolen). If you need or prefer cash, you can use an ATM to retrieve your money on nearly any street corner. And with ATMs you can even deposit checks, so you don't have to go to the hassle of waiting in line.

But let's say you want to talk with a real person about your money. You can go to a bank branch and get personal service. You can sit down with a banker and have them help you customize your accounts. Just today, I walked into a branch of my bank, and within two minutes a banker helped me close a business account that I no longer needed. He was extremely friendly and asked me if there was anything else he could do to help me. Previously a banker set me up with a permanent fee-waiver for my ATM card. That's great service.

Your bank likely allows you to transfer money online, get your account balance from anywhere, and track your spending and savings. Depending on the type of account you may even earn interest on the money you keep at your bank. And these are just the basic services your bank likely provides. Every day banks are rolling out more features — like banking apps — all for free.

3. You Can Often Get All of a Bank's Services for Free

All of the services I listed above? Many banks will give these services to you for free. Even if your account is listed as having a fee, walk into your bank and ask a banker if there is a way to waive it. Often, if you "bundle" services, your bank will waive the monthly charge. For example, see about opening a deposit account, setting up recurring transfers, or enabling direct deposit. Or maybe it's worth refinancing your home with a mortgage from your bank.

4. If You're Paying a Fee, You're Likely Getting Great Side Benefits

If you are paying a fee on your account, you are likely getting some additional benefits. Some fee checking accounts pay interest, provide free checks, or give you a cash rebate for the amount spent on your debit card. (If you're paying a fee and aren't getting any benefits, ask how to get a fee waiver or see point six below.)

5. Banks Are Subject to More and More Governmental Scrutiny

Every day, banks become subject to more and more governmental scrutiny. Some of these regulations may be warranted, but for the most part they are harming the community bank down your street. (That's the bank where not only will they be more likely to know your name, but you're most likely to get a loan if you want to start a business.) And these regulations are costing banks money to comply with. But banks are still passing very few of these costs onto the average consumer. And that's another great reason to love your bank.

6. You Can Change Banks

If you don't love your bank, you should switch. It's that simple. Every other bank wants you as a customer and you should make the most of that situation. If you don't feel that your bank is giving you the services and support you need, find another bank. Consider an online-only bank or the community bank down the street. There are thousands of banks. Think of the services you need, and find a bank that meets your criteria. If you were trusting the safety and security of your home to a company, you'd spend some time ensuring that it's the best fit for you. Do the same with your money and find a bank that you love.

What's great about your bank?

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This article is from Elizabeth Lang of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Easy Ways to Rein in Your Spending Without Sacrificing Fun

David Ning — Mon, 18 Jun 2012 10:36:08 +0000

If you are like most people, you may find it difficult to save money because you feel like you will miss out on all the good things in life if you are pinching your pennies. Sure, fabulous meals out, exotic vacations, stylish clothes, and cool gadgets are nice to have, but they can really rack up the bills. The good news is that by making a few small changes, you can enjoy the same quality of life you have always had without giving your wallet a beating. Here are a few examples. (See also: 25 Frugal Changes You Can Make Today)

Set Up a Card-Less Bank Account

ATM cards are ridiculously convenient. They allow you to take out money any time of day or night, whenever and wherever you need it. However, this also makes it tempting for you to spend that money wherever and whenever. There are many banks that allow you to operate on a no-card basis, so you can only deposit or withdraw money directly from a teller or, in the case of a high-yield online savings account, only via an online transfer.

With these accounts you must physically go in to a bank to withdraw money, or wait a few days for the transfer to go through. This makes it more difficult to withdraw the funds, so it may prevent you from making impulse purchases. In addition, many card-less bank accounts have lower withdrawal fees and offer higher interest rates, so you may actually save more.

Host Nights in Instead of Going Out

A night out could cost you an arm and a leg in restaurant bills, movie tickets, overpriced drinks, taxis, or cover charges. On the other hand, staying in can be very inexpensive and just as fun. Invite people over to your house for a movie night, throw a BBQ or a potluck dinner, or just relax with a bottle of wine and good company. There are plenty of things you can do in the comfort of your own home that are enjoyable, yet cost next to nothing.

Get Fit Without the Gym

We all know that going to the gym is an excellent way to stay fit and healthy, but gym membership fees can also be wildly expensive. Besides, who wants to stay cooped up in the gym when you can be enjoying the great outdoors? Think about ditching the gym membership and taking up cycling, walking, or hiking, especially if you live in a walkable neighborhood. If the weather is not great, invest in a yoga mat and some exercise DVDs that you can do at home. The amount you save on one month of gym fees will easily cover the costs of the DVDs and mat.

Scour Your City for Free or Discounted Events

There is nearly always something cheap to do if you know where to look. Search online listings or in your local papers for interesting events that do not cost anything to attend. Many festivals, outdoor concerts, and cultural events do not charge admission. In addition, many museums, art galleries, and theaters offer special deals on certain days of the week. For a completely free outing, take a trip to your local park for a picnic or an afternoon gathering instead spending money in restaurants and coffee shops.

Cutting back on spending does not mean you have to cut back on fun as well. There are many ways you can have a good time without spending a cent. All it takes is some creative thinking and slight lifestyle changes, and you can enjoy life while watching your savings grow.

This article is from David Ning of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

4 Ways to Beat Debit Card Fees

Philip Brewer — Thu, 06 Oct 2011 10:36:22 +0000

Several banks just announced new monthly fees for debit card users. Fortunately, there are plenty ways to avoid them. (See also: That Sneaky Bank Almost Got Me)

Until this month, the large swipe fees they charged merchants made debit cards a huge profit center for banks. They were so profitable, banks were offering all manner of perks if you'd promise to use your debit card at least 5, 7, or 12 times a month.

Those days are gone. As of October 1st, the swipe fee is limited to just 24 cents. That's still plenty of money to make the debit card business profitable for the bank, but it's not going to fund the huge bonuses that bankers have gotten used to. So, they're looking for other sources of money.

Once source they looking at is a monthly fee. Bank of America is going to hit your account with a $5 fee every month that there's even one debit card transaction. Wells Fargo and Chase are testing monthly fees as well.

You don't need to pay those fees. Here are four ways to avoid them.

1. Change Banks

The big money-center banks don't want your piddly little consumer banking business anyway. They make their money from packaging corporate finance deals, selling credit default swaps, and creating collateralized debt obligations. They figure the plain-jane transaction business of debit cards is beneath them (unless there's some serious fee income involved).

Instead of a big money-center bank, consider:

Smaller Banks

The medium-sized regional banks probably aren't much better than the money-center banks — they'd also rather be pocketing a million-dollar fee for arranging a standby letter of credit than handling your checking account. But, as the banks get smaller, they start taking real interest in serving their smaller customers. There are plenty of small, local banks that don't charge a fee for checking accounts, with or without debit cards.

Credit Unions

Credit unions are owned by their members. Serving your financial needs is what they're all about. They're a lot less likely to charge a fee than a bank is.

Brokerage Firms and Other Non-Banks

If you're wealthy or broke, this may be the option for you.

If you're wealthy, get a cash management account at a brokerage fund. They'll issue you a debit card that will give you access to your wealth, and they won't charge a fee for the card. (Big-name brokerage firms charge a hefty fee for the account; discount brokers tend not to.)

If you're broke, get a reloadable debit card. They have fees as well, but the fees are for specific services (like cashing a check, checking your balance, or using an ATM). Many now allow one free ATM withdrawal per month, and most charge no fee to accept direct deposit. If you track your balance yourself (so you don't need to check your balance), you can use them in a way that's practically fee-free.

2. Use a Credit Card

Just about any place that will take a debit card will take a credit card as well. There are a few exceptions, but not many.

Of course, it's easy to get over your head in debt. But that's not the credit card's fault. If you can use a debit card and not spend more than you have in your checking account, you can do exactly the same thing with a credit card. The only difference is you have to do it yourself. This may be the right choice — if you're ready to control your spending without training wheels.

3. Pay Cash

Go totally old school and pay for things with money! Yeah, plenty of people say they spend more if they have cash in their pocket. I say, get over it. You have exactly the same amount of will power and self-control with cash in your wallet as you do with a debit card.

4. Write a Check

Actually, even I don't do this any more. I still pay bills by writing a check (really!), but I can't remember the last time I wrote a check at a store. And yet, it can be done. It used to be done routinely.

This is hardly the end to the possibilities. The transaction business is about to go non-linear. Paying online, or with your cell phone or your mobile device, is already here, and it's just going to get more common.

With all those ways to avoid debit card fees, there's no reason to pay one.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

New Tools for the Unbanked

Philip Brewer — Wed, 15 Jun 2011 10:24:21 +0000

Until just the past few years, lack of access to the banking system has been an expensive burden on the poor. Just recently, a surge in new financial products make it a lot less expensive to be unbanked. (See also Making Direct Deposit Safe for the Garnished)

It used to be that you either used the banking system, or you paid through the nose to buy individual banking services (3% or more at a check cashing store, $1 or more for a money order, outlandish rates for a payday loan).

The Unbanked

Although the barrier to using the banking system is usually described in terms of poverty, merely having little or no money doesn't need to block access. It's really a cluster of related problems that add up to make using conventional banking services so difficult and expensive that people end up choosing to do without:

No cash to keep a minimum balance
No regular paycheck to have direct deposited to qualify for a no-fee account
Not living in a neighborhood with a local bank
Not speaking (or reading) English well enough to use banking services
Not having the skills to maintain a check register
Having a history of bounced checks or unpaid debts
Working during banking hours

Any two or three of those issues can put the regular banking system out of reach (although someone with a little financial savvy can almost always find a cheap way into the banking system).

But if the way you live your financial life makes the banking system a poor fit, there are now some alternative financial service providers that can be cheaper than regular banks.

The New Prepaid Cards

These alternatives are organized around a prepaid debit card. Instead of cashing a check, they put the money onto your card. This is just as good for you (you can get cash at an ATM) and cheaper for them.

These cards do charge fees — a lot of them. There's often a fee to get a card, a fee to add money, a fee to use an ATM, a fee to check your balance, a monthly fee, etc. But the fees are clear (rather than mysterious the way bank fees can seem to someone whose parents didn't teach them how to use a bank). And they're low — a careful user can keep the monthly charges at just a few dollars (less than they'd pay for a bank account).

Further, we're about to see another step down in these fees. That's because the new cap on debit card swipe fees has an exception for reloadable debit cards — provided the cards have no overdraft charges and allow at least one no-fee ATM withdrawal per month.

I still think the banking system is the better choice for most people. But for everyone else, the next generation of prepaid cards will provide most of the banking services they need, and do it with lower fees than ever before.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Paper Checks: Going, Going...Gone?

Tisha Tolar — Fri, 14 Jan 2011 13:00:12 +0000

Many Americans still retain a checking account for the purpose of writing actual paper checks. Consumers continue to use paper checks out of habit, convenience, security, or having no other option with a vendor. But there are big changes on the horizon that may cancel the use of personal checks or paper checks in general. Are you ready to go paperless? (See also: Why I Still Write Paper Checks)

Who’s Changing and Why?

Many creditors, lenders, utility services, and even federal and state government agencies are shying away from issuing or receiving paper checks. For instance, those who receive child support payments now do so through a debit card and direct deposits. Banks and other vendors are offering incentives for customers to go electronic. Paper statements and paper checks are becoming a thing of the past.

The move to electronic payments and direct deposits essentially all comes down to the cost factor. In order to save money and cut expenses, state and federal agencies especially are making the switch. There is more cooperation between banks and government agencies to keep programs moving forward and organized.

While some feel the move is not such a great idea, there are benefits for both sides. Vendors benefit because their overhead is lowered. For consumers, the receipt of child support payments or unemployment benefits is seamless. No more waiting for the mailman or worrying over lost or stolen checks. Payments are now being made via direct deposit onto a debit card issued by the agency responsible for payment. For each payment, cards are reloaded automatically.

What to Watch For

While cost and convenience are certainly pluses to both vendors and consumers, this changes the rules. Without understanding the changes, consumers will likely end up making mistakes that will cost them cash because they didn’t know any better. Here are some essential things you need to know about going electronic:

Unexpected Fees

Most governmental agencies do not charge a fee for money being reloaded onto a card. This may be the case now but not always. In the case where you receive a refund or a rebate from a retail store or other entity, funds issued through a debit/credit card may not be fee-free. You may have to pay fees for each transaction you make or for reloading a card with new funds. There may also be additional fees for use at an ATM or for maintaining an inactive card. Check with the terms and conditions of the card in refund situations. It may be better to ask for a store credit rather than getting stuck with fees and losing your access to the full amount you are owed.

Balance Checks

With some cards you may incur a fee for using your card in any capacity at an ATM, including for a simple balance transfer. Find out if you are going to be charged for balance checks done over the phone or the Internet. If fees are incurred, it would be smart to keep tabs on your expenditures on a piece of paper rather than lose cash to a series of fees. This is also key because if you go over the amount of funds on the card when making a purchase, your card will either be declined or you’ll be hit with a pretty significant overdraft fee for each transaction you make over your limit. Not only will you be out of funds, you’ll be responsible for paying the overage charges.

Keeping Your Card Safe

While a plastic card may be much more convenient than a paper check, there is still a risk of having it stolen or losing it. A lost card may cost you up to $25 to replace, so make sure you keep your card in a safe place at all times. Not only do you face fees, you’ll also lose access to your funds during the processing time.

Online Security

If you are making payments to vendors such as your utility companies, mortgage lenders, or loan providers, be very careful about your online security measures. While most banks and legitimate vendors will have established a thoroughly secure system for accepting payments online, you must make sure your own computer is safe. It is not advisable to store passwords online or on your mobile phone because of the potential for identity theft.

Card Rules

Federal assistance programs and refunds issued through debit cards may also come with special use rules that you need to understand. There may be limitations to what you can use the card for, and you need to be prepared to follow such rules. For instance, government programs such as food assistance programs will only allow for certain purchases to be made on the card. You may also only be able to use your card for a certain amount of transactions within a month’s time period.

This article is from Tisha Tolar of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Why I Still Write Paper Checks

Philip Brewer — Mon, 29 Nov 2010 13:00:08 +0000

I know plenty of people who write essentially no paper checks any more. I know students who pay everything with debit cards. Others manage their financial lives with electronic payments. I do neither. I get by with a mix of cash, credit cards, and paper checks.

Now it's really just a matter of inertia. I used to have some reasons for doing things this way, but they've all been superseded by events:

Float

It used to be that writing checks produced float — the time between you handing over your check and your bank debiting your account. Back in the early 1980s, when interest rates spiked up over 14% and paper checks had to be flown back and forth across the country to be presented at your bank for payment, float was a big deal. (See also: Avoid Bank Fees)

Even for ordinary people it could be a big deal. Let's say your mortgage payment was $1,000. If you had your mortgage at an east-coast bank and you paid it with a check drawn on your west-coast money market fund, it could easily take five business days for your check to clear. At 14%, you'd be earning 38 cents a day, so the float could make you $1.92 (even $2.68 when the weekend lined up right and you got seven days of float). That's $2 a month of free money, just from the float on one bill! Multiplied across all your bills and twelve months a year, float could easily add up to $100 a year.

For businesses, it was a much bigger deal. If could increase your float by one day, you could add $140,000 straight to your bottom line for each $1 million worth of payments you made per day. There were consulting firms to help you locate the right bank for your checking account (that is, the bank that was most remote from whoever you made payments to).

Nowadays, of course, it makes little difference. Between Check 21 and the various kinds of Automated Clearing House (ACH) check truncation, checks usually clear almost immediately. You're lucky to get two days of float. Plus, interest rates are near zero, so there's really no point.

Security

There was a time, long ago, when the only way to get money out of a checking account was to present a check for payment. Even the account holder did it that way: He came in to the bank with a check made out to "Cash" and presented it for payment.

Those were the good ol' days. The only way a thief could steal money from your account was to forge a check — either modify a real check or else print checks with your account number and then forge your signature on them. Checks were printed on "safety paper" to make such forgeries more difficult to do and easier to detect.

You got the actual paper check returned to you after the bank had paid it — with the word "Paid" stamped across the front. That served as proof of payment. If the check was a forgery, you had the evidence. (It was also kind of interesting, because you could see all the endorsements on the back. You could tell if someone had just deposited the check into their own account or signed it over to someone else. You could also see all the banks it had passed through on its way to your bank.)

For a time, when ACH debits were just starting to take off, I made a point of never authorizing an automatic debit to my account. I figured it would make it easier to deal with a theft of that sort — I wouldn't have to argue about whether a particular transaction was or was not authorized, because I could just make a blanket statement: No automatic debits were authorized.

Nowadays, of course, practically every transaction that hits your checking account is an automatic debit of some sort — even the ones that you initiate by writing a paper check. There's no way to prevent it; if you could, it would just make your checking account worthless.

Errors, and Fixing Them

I was actually an early adopter of electronic banking back in the early 1980s. There wasn't an "automated clearing house" in those days. Any kind of automated payment needed to be negotiated individually by your bank and whoever you were trying to pay. The same was true of direct deposits.

I ran into a number of errors in those days, including a direct deposit failure that delayed my paycheck for several days. My roommate at the time had a mortgage payment go similarly astray, causing more than a little stress. Perhaps it was a reaction to those early errors that prompted me to just stick with paper checks.

Nowadays the automatic systems are probably more reliable than the paper systems, and there are actually pretty good rules to protect you from errors and unauthorized transactions (although only if you check your statement and tell the bank if there are any).

I'm Not the Only Luddite

I suppose there are plenty of other people who still write paper checks out of simple inertia. But there's one group that has a real financial interest in paper checks: the companies that print checks. One of them, Deluxe Corporation, has started an ad campaign called "Stand Up for Your Right to Write Checks," complete with a mildly amusing video:

The video shows someone paying with a check at a convenience store counter. Even I don't try to do that any more. I did continue to write checks at the grocery store long after I'd quit using them at other stores, but I finally switched to credit cards about three years ago. (I long ago quit carrying a checkbook around with me, because the only place I ever write checks any more is at my desk.)

Still, the general message — that the payer ought to have the choice of how he pays — is one that resonates with me. Any business that sends me a bill is going to get paid by check. If they can't deal with that, they're not going to get my business.

How about you guys? Anybody else out there still paying their bills with paper checks?

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Credit Cards vs. Debit Cards: A Comprehensive Comparison

Craig Ford — Wed, 15 Sep 2010 13:00:07 +0000

"Credit cards and debit cards have the exact same benefits."

I've heard this statement for a long time, but I wanted to test it out to see if it is true. Unfortunately, we often pass along information we received because we either assume it to be true, or we've heard it from a single reputable source.

Basic differences between a debit card and a credit card

When you use a credit card, the credit card company essentially extends you a loan for the amount purchased. You typically sign for the purchase, and when they send you a bill, you are obligated to pay your balance. If you do not, the credit card company will charge you interest rates and fees.

A debit card is associated with your bank account. When you make a purchase, that exact amount of money is taken out of your bank account within days. When you use a debit card, you typically use a PIN number.

The cards look the same, are scanned the same, but are very, very, different.

Which offers the best card protection benefits? Credit Cards.

Credit card purchases are covered under the Fair Credit Billing Act. The act states that when you purchase something with a credit card, you are only liable for $50 worth of fraudulent purchases (although in reality, most credit card issuers have zero-liability policies that mean you are not responsible for any fraudulent charges. The act also gives you the right to dispute charges for goods that were never delivered or that you received damaged.

If you make a purchase with a debit card, the Electronic Transfer Act does provide some protection during a dispute or error. If you notify your bank within two days, your liability is limited to $50. However, between two days and six days your liability could increase to $500. Waiting more than six days could mean you have no coverage.

Which is better if you work for a company that uses a reimbursement system? Credit cards.

With a credit card you have the ability to delay or float payments. This is especially convenient when you use a reimbursement system with your employer. You can make the purchase today and you have 30-40 days until the payment is due. For anyone who makes purchases on behalf of their company, a credit card certainly carries the advantage.

Which is better when renting a car? Credit cards.

Most major credit cards offer an auto rental coverage that allows you to safely decline the recommendation to pay extra for insurance when you rent a car. In addition, several major car rental companies do not accept debit cards as a form of payment.

My experience: Last year, our family was in Australia and I wanted to use a debit card to rent a car. In order for the company to accept my debit card, I would need to let them to put a $500 hold on our checking account. Since we planned to spend cash for purchases on our vacation, I wasn't sure that we had enough available balance for the hold so I used a credit card. When I returned the vehicle, they billed the charges on to the debit card. On that occasion I was glad to have a credit card in my wallet.

Which is better for avoiding credit card debt? No brainer — debit cards.

This, by far, is the strongest argument in favor of the debit card. If it helps you control your spending and helps you avoid credit card debt, then that one feature alone is as precious as gold. If you currently have credit card debt or are trying to get out of credit card debt, then cutting up the credit card and using a debt card is probably one of the smartest decisions you can make. (See also: Best Prepaid Debit Cards)

Which provides more rewards? Credit cards.

Credit card rewards are one of the primary reasons why people use credit cards. Cash back rewards are attractive to some people because you get a percentage back for your purchases. And travel lovers can rack up rewards worth hundreds or even thousands of dollars a year on travel credit cards.

Note, however, that you should only concern yourself with rewards if you pay off your balance in full every month. Otherwise, the interest charges you'll accrue by running a balance will most likely outweigh the value of any rewards you'll earn.

Which is best to use overseas? Depends on your particular bank and credit card.

Depending on your bank policy and your credit card foreign currency exchange rate, either one might be better. In my case, my bank charges a 1% fee for using my ATM at an overseas machine, while I have a Schwab Visa card that offers 2% cash back and has no foreign transaction fees. However, it is not uncommon to pay a 3% foreign foreign transaction fee with a credit card.

If you plan to travel overseas, you will need to explore the best way to exchange foreign currency before heading on your trip. (See also: How to Get Cash While Traveling Abroad)

Which is more expensive? It depends on use.

Both debit cards and credit cards have associated fees. Looking at one of my credit card fees and finance charges, if I miss a payment, I'll pay $15–$39. If I don't pay my balance in full, the APR (annual percentage rate) is 23.99%. Many rewards cards also charge annual fees of $50–$100 a year. Yes, that is expensive.

On the other hand, debit cards can be expensive, too. The average bank overdraft charge is about $36. A bank may also add a nonsufficient funds fee. These fees can really stack up,

Moral of the story: Both are extremely expensive to use if you don't learn how to budget and properly manage your finances. If you don't track your spending well, both could mean a financial train wreck is waiting in your future.

Ultimately, it comes down to this last question.

Do debit cards feel more like real money? I'm undecided.

Creditcards.com reports:

A recent TNS Financial Services Consumer Credit Card Program Study indicated that over 60 percent of consumers prefer using debit cards to credit cards as a payment vehicle, because debit feels more like "real money."

Ultimately, I'm yet to be convinced. Does sliding a plastic ATM card feel more like money than a plastic credit card? I've personally never felt the difference. Do you?

Final conclusion

Choose whichever method best helps you manage your money, but realize credit cards do clearly have more benefits. The risk may outweigh the benefits, so I'm not suggesting you use a credit card. Also, you might consider comparing the cost of paying cash versus either a credit card or debit. Just understand the differences, and then make an informed decision. (See also: Is an All-Cash Diet Right for You?)

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This article is from Craig Ford of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Travel and Money: Using Your Debit Card on the Road

Nora Dunn — Thu, 10 Jun 2010 14:00:05 +0000

Your next vacation won’t happen without money…both prior to and during your trip. But with currency conversion discrepancies, high surcharges, and the risk of theft or loss, managing your money on the road isn’t as simple as you may think. This Travel and Money series discusses various ways to address your money issues while you are abroad.

Using your debit card is one of the best ways to access cash and pay for items while traveling. But it’s not an infallible tool; below are some things to be aware of and tips for using your debit card safely on the road while minimizing fees. (See also: 4 Ways to Beat Debit Card Fees)

Withdrawing Cash

No matter where in the world you travel to on vacation, you need cash on hand. But depending on the length of your trip and the country (or countries) you are traveling to, it is rare (and sometimes dangerous) for you to access and carry all the required cash with you from home. This is where your debit card can come in very handy.

Using your debit card at local bank machines often offers the most favorable rates and convenience factor. ATMs are almost everywhere, and where there isn’t an ATM, there’s usually a bank that can accept your ATM card as an instrument for withdrawing cash.

However it’s not as simple as pulling money out in $20 increments whenever you need it; here are a few things to think about:

Your Home Bank’s Fees

Unless you are visiting a branch of your home bank abroad, you’ll likely be tapping into the Plus or Interac system to use a different bank’s ATM or even a privately owned ATM. For this privilege, your bank will likely charge a fee per use of a foreign ATM.

Foreign ATM Fees

You’re not off the hook yet; the foreign ATM you are using (especially if it’s not associated with a major bank) will likely be charging a fee as well. This fee varies depending on where you are, but is usually the equivalent of a couple of dollars.

Currency Conversion Fees

Last but certainly not least, somebody’s going to make some money on the currency conversion factor as well, since you are inserting a debit card in your home currency and the machine is spitting out local currency. These fees are usually levied by your bank, and although they’re often lower than other currency conversion fees (which we’ll address later in this series), expect to be stung for up to a few cents on every dollar.

Paying With Your Debit Card

Electronic payment systems that allow you to use your debit card at the counter are becoming increasingly common, especially in western countries. This can negate the hassle and risk of carrying a lot of cash with you, and depending on the arrangement you have with your bank, it can also be quite inexpensive.

Withdrawal Fees

Some banks don’t charge at all for debit purchases, so it pays to look into the account you have with your bank. Even better: some vendors allow you to take cash out as part of the purchase, which is a way to negate the ATM fees listed above. However be sure to ask the vendor if they charge for taking cash out; sometimes they’ll charge a fee for the privilege of taking extra cash out as part of your purchase.

Currency Conversion Fees

You’ll still likely have to pay the same currency conversion fees as you would by making withdrawals through an ATM. Keep in mind that if you are traveling through a country (or coming from a country) with a highly fluctuating currency, you’ll be at the mercy of the daily conversion rates as well — for better or for worse.

Safe Use of Your Debit Card

No money management technique while traveling is infallible. The best you can do is to manage the risks and remain alert to problems or dangerous situations. Here are some tips:

Limit Your Bank Account Balance

If somebody gets a hold of your debit card and PIN number, all the money in your account is at risk of being stolen with little to no recourse in recovering it. So limit the amount of money you keep in your bank account to a reasonable amount (I tend to maintain a balance that covers any automatic debits and prevents me from paying a monthly bank fee). You can keep the rest in a high-interest savings account, and if you need more money while traveling, you can go online and transfer it over to your bank account.

Protect Your PIN

This may seem like old news, but people are still shocked when they realize somebody looked over their shoulder and scooped their PIN number (and then scooped their debit card a few minutes later). Don’t feel silly about covering up your PIN number as you enter it, either at the ATM or cashier.

Keep Your Bank’s Contact Information Handy

Just in case there’s a discrepancy or emergency, have your bank’s contact information handy so you can get in touch with them from the road. If your debit card is stolen for example, you can call your bank and they can freeze the account or possibly help you recover lost funds.

Watch Your Account

Consider signing up for online banking (if you haven’t already) and periodically check the transactions on your account to ensure all is well. Again the sooner you spot a problem and alert your bank, the better the chances are you won’t be out of pocket for fraud or theft.

Withdraw Cash in Lots, But Not Too Much

To keep ATM fees low, you will want to withdraw more cash than you immediately need. But beware of carrying too much cash on you, as the risk of theft is ever-present. Later in this series we will discuss techniques for carrying cash safely while you travel as well.

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This article is from Nora Dunn of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

How to Use Up Remaining Balances on Prepaid Gift Cards

Linsey Knerl — Mon, 22 Mar 2010 14:00:01 +0000

Looking in my wallet, there are no less than 5 prepaid debit or gift cards hiding at any one time. While I seem to have no trouble using up store gift cards (Walmart or Amazon, for example), I just can’t seem to rid my life of these nagging, tiny balances that make it inconvenient and a little embarrassing to shop. With some research and a lot of trial and error, I found some ways to get my money’s worth out of these well-meaning assets — every last penny.

First, I won’t trouble you with advice on using store or retailer cards. I’m sure you can figure out how to use the last $2 on your Starbucks card (if you haven’t figured it out, just walk into any Starbucks. They’ll apply whatever remaining balance you have to your next purchase. Or you can simply reload it.) While the strategy to using up remaining balances are similar, it’s not always so clear cut. And let’s face it, I’m less likely to whip out my Visa with the $2.23 balance and buy anything at a store — especially since it may cost the retailer between $1.00 and $2.50 just to process it.

Know What Your Balances Are

This seems obvious, but there are times that I may have one or two cards floating at the bottom of my purse that I’m not sure how much is left on them. While I prefer to use the web address printed on the back of each card to find the balance, some will only allow you to call an 800 number. Another thing to note is that in order to check your balance online, you may be required to register that card. The benefit to doing this is that your balance is stored online, and in case of a lost card, you can at least make purchases online with it — or possibly get a replacement. The drawback is that you may not want to keep the card forever (see tips below) and you don’t want to register a card that someone else may try to register in the future.

Make Note of Your Balances

Again, simple idea here: Some of the newer gift cards have a little box on the back of the card that let you write in the amount you have left after each purchase. Others give you nothing, so I suggest wrapping a sticky note around it with the balance written on it. The next time you’re waiting to check out, you can easily identify which card will have the balance closest to your purchase amount.

Analyze Your Spending Habits

I don’t shop at some major stores — ever. It’s not that I don’t like them; I’ve just found them to be too far away geographically, or out of my comfort zone. For this reason, I’ve become very familiar with the stores I use most, and their policies for using prepaid gift cards. Walgreens, for example, has no issues about letting me pay for a purchase with multiple methods of payment. This makes my local Walgreens store a great way to “ditch” balances with little interruption to my shopping routine. If I’m taking advantage of a Walgreens Register Rewards deal, and want to buy several packages of diapers, I can just ask the cashier to apply $2.36 of my purchase to the gift card, then pay the remaining balance with my regular credit card or cash. Easy peasy. Other stores are really great about this too. (Just know what credit cards each store takes.)

Recycle Into Other Gift Cards

When researching ways to dump my gift cards, I ran into a lot of suggestions to convert them to Amazon gift cards. As an avid Amazon shopper, this idea really appealed to me. While the smallest gift card you can buy is $5, you don’t have to buy in increments — so you can buy a gift card worth exactly $5.36 and have it sent to you via email the same day. You can then apply the gift card directly to your Amazon account balance, giving you an extra $5.36 of spending power the next time you shop. Some have reported this same kind of goodness with Walmart.com (which also allows you to buy iTunes gift cards and some restaurant cards like Chili’s and Subway in select increments only).

My personal experience with this method has been hit or miss. While the Amazon site doesn’t mention anything about holding a particular amount of your gift card to ensure it’s valid, it seems that this may be the case. Frequent purchasers of Amazon cards recommend holding back $1 of your balance in case of an “authorization” amount that will later be returned to your card balance. (Of course, who wants $1 left on their card?) Some have suggested immediately converting a $20 prepaid card into one $10 Amazon gift code, waiting until the purchase clears and the $1 authorization amount is credited back, and then buying another $10 code. (Apparently, the $1 authorization is only applied the first time you use a particular card.)

Be Kind

Perhaps the easiest way to use up gift card balances is to pass them on to others. It’s kind of like dumping your problems on other people, except there’s free money involved. If you don’t want to deal with a $3.56 gift card balance, I’m sure there’s someone who would love to. Examples of places that will usually not turn down cards include local women’s shelters and some churches. Be sure that you are upfront with the amount on the card, the date the balance must be used by (if any), and any fees that may be charged as a result of purchase.

One way I’ve recently used a $10 gift card to a store that closed in my area (so I couldn’t use it) was as a “bonus” tip for a server at a restaurant. I wouldn’t recommend substituting your cash tip for a gift card tip unless it’s of such a generous portion that the inconvenience of using it is outweighed by the value, but “bonusing” on top of the cash tip probably would be well appreciated!

Cash Out

There are a few scattered reports of banks that will cash out any amount of gift card, provided you are a customer and show proper I.D (names mentioned included Chase). There may or may not be a fee attached. Also, residents of California can legally cash out any gift card with a balance of less than $10. See your state’s Department of Consumer Affairs website to see if similar legislation has been passed in your area.

Sell, Trade, Recharge, or Regift

There are many people who try to sell their unused gift cards on Ebay. This may work for larger cards, but it’s still a hassle. I’d much rather make it work some other way. Also, sites that allow you to trade unused gift cards are becoming popular — but again, I don’t want to have to mess with mailing addresses and postage for a tiny balance. There is still the possibility of “reloading” a card, if it’s allowed (some cards aren’t made for this).

Maybe you could regift a card that had its original balance on it? (Giving a $5 balance on a clearly branded $25 card, for example, seems a bit tacky.) Any other ideas?

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This article is from Linsey Knerl of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Is a Prepaid Debit Card Really Cheaper and Better than a Bank Debit Card?

Xin Lu — Fri, 09 Oct 2009 14:00:02 +0000

A few month ago, my husband received an unsolicited Visa Debit Card from NetSpend and I wrote about it here on Wise Bread. I admit that I did not know much about NetSpend at that time besides that they were sending out unsolicited cards. According to the comments many people received these unwelcomed cards, and some were even sent to to their pets, underaged kids, and ex-husband. What I found interesting was that several commenters defended prepaid debit cards like NetSpend and stated that it was cheaper than getting a bank account. In response to these comments, I decided to look into the fees and services of prepaid debit cards.

First of all, I looked at the NetSpend fee schedule. There seems to be two types of customers: Pay-As-You-Go and Fee Advantage customers. The Pay-As-You-Go customers have to pay $2.00 for each PIN purchase, and $1.00 for each signature purchase. The Fee Advantage customers have to pay $9.95 as a monthly service fee and both types of customers need to pay $9.95 to get a card. There is also a charge for loading money onto the card determined by the local distributors, and non-internet account balance inquiries cost 50 cents each. Each ATM withdrawal costs $2.50, and each ATM decline costs $1.00. Additionally, if there were no transactions within 90 days then there is an additional $5.95 per month account maintenance fee. Additionally, if you try to close your account you will be charged a fee of $5.95. Similar services like Green Dot also has a full menu of fees. In the case of Green Dot the company continues to assess a monthly charge even after the balance falls below $0.

So how does this compare to a bank account? It is true that there are no overdraft fees on these cards, but as long as you watch your balance carefully you can avoid overdrafts fees on a bank account. Many banks also offer free checking accounts with minimum balance requirements of under $100 with no account maintenance fees. The checking accounts usually come with a debit card that can be used at the bank's ATMs and many stores without a fee for every single swipe. Also, debit cards associated with checking and savings accounts have much better fraud protection than prepaid debit cards. Usually credit cards and debit cards associated with deposit accounts limit your liability in case of fraud and the money you deposit in any FDIC member bank would be insured. However, prepaid debit cards do not seem to have that protection so you may be on the hook for any fraudulent activity. Finally, I think it is ridiculous that many of these prepaid cards charge people for loading money onto the card. I have never had a bank account that charged me for depositing money.

I think the main issue with these prepaid cards right now is that they are much less regulated than bank accounts and credit cards. This lack of regulation allows them to send out unsolicited cards, and also nickel and dime those who are unable to get a regular bank account or credit card. The potential for fraud is also very high since anyone can get one of these cards very easily due to the way they are being distributed. I understand that these cards may be the only choice for those out there who cannot get a regular bank account or credit card, but it really seems that the industry is taking advantage of those who need every bit of their cash by assessing all of these fees. If you do have one of these prepaid cards that charges for every little thing you do, make sure that you avoid as many fees as you can by minimizing the number of transactions you make and also meet any deposit requirements. It is also possible to shop around for the company that has the least fees.

For further reading about a variety of prepaid card fees and problems the New York Times just published this a great article titled Prepaid, but Not Prepared for Debit Card Fees. Do you have one of these cards? How do you minimize the fees? Do you believe that they are better than bank accounts?

This article is from Xin Lu of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

netSpend: The Story of the Visa Debit Card We Did Not Apply For

Xin Lu — Fri, 29 May 2009 22:02:19 +0000

This week my husband received an unsolicited Visa debit card from a firm called netSpend. It was certainly an odd experience to receive a card that looked official instead of a pre-approved application packet. This is my story of shock, anger, and finally disgust at the practices of this financial firm. (See also: Credit Cards vs. Debit Cards: A Comprehensive Comparison)

At first, I was confused as to why my husband would open an Visa debit account without telling me. So I asked him if he applied for this card. He was bewildered and said, "No! Did my identity get stolen?" I was equally confused because the card has to have money loaded onto it to be worth anything so it would be worth nothing to identity thieves unless they managed to steal the card after we load money. Additionally, this card came to our address, and it does not make sense that an identity thief would send what they want to steal to us.

So I read the enclosed letter, and it says that some partners of netSpend recommended my husband for the Visa debit card service. The problem is that my husband did not apply for this card, so it does not make sense that a new card is now here waiting for his activation. Even if other financial firms sold his name and address to partners the most they should do would be to send a fake credit card along with an application. So I researched this company a little bit online and it seems that it has sent out cards to other people who did not apply for the card. There is also a slew of other complaints against this company regarding how it handles customers' money.

The next day I promptly called netSpend and asked them to close down this account. According to the representative, someone at netSpend thought that our household needed a Visa debit card, so they sent us one. As long as we do not activate it the account does not exist in their system. Basically, the representative was admitting that we did not apply for the card. By shoving an unwanted card onto us, netSpend pretty much lost any chance of having us a customer in the future.

In conclusion, this is probably the most distasteful customer acquisition tactic I have ever seen because it really made us feel a bit violated. Credit and debit cards are not supposed to be given out like candy and I hope netSpend realizes that. It seems that netSpend's business is basically to get people to deposit money onto its cards and then slowly wittle away peoples' money with fees. When I called their toll-free number it says that it costs 50 cents just to check your balance! So it does make sense that they want as many people to deposit cash onto their pieces of plastic as possible. However, telling people to activate cards they did not apply for is definitely not the way to go.

If you're actually looking for a good prepaid card, we have a list of the best prepaid cards.

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This article is from Xin Lu of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread:

Carry some cash

Philip Brewer — Wed, 19 Sep 2007 14:34:41 +0000

I recommend carrying some actual cash money. When I do that, a lot of people say, "Why? Everyplace I go takes credit and debit cards." In fact, I know people who brag about spending no cash at all for weeks or months at a time. A no-cash life may be good for bragging points, but I suggest you carry some cash anyway.

I was visiting someone in the hospital last week. Several times I made small cash purchases on her behalf that might not have been so easy to make with a credit or debit card. (I got her a soda out of the machine, for example, and some sugar-free gum at the hospital gift-shop.) There was probably an ATM machine somewhere in the hospital, but I don't know where exactly, and because of the way parking was arranged there, it would have been quite unhandy to have to zip out and go find an ATM elsewhere.

My own history with cash

When I was younger I carried very little cash. I had two reasons for keeping cash-on-hand to a minimum. First, because interest rates were a lot higher, the potential return on an extra $100 in a money market account oughtweighed the hassle of an extra stop or two at the ATM. Second, I didn't have much money--not enough to take a month's spending money out of the bank, if I also had to pay rent out of the same paycheck.

I changed my ways during a visit to Germany. I'd brought a few Deutsche Marks (enough for travel from the airport to the hotel), but most of our travel money was in travelers checks. It turns out, though, that in Germany you can't really use travelers checks at stores or restaurants. They're easy to cash at a bank, but we'd arrived on a Friday after the banks were already closed, so we were looking at no more cash until Monday. (This was a while ago. Nowadays you'd just hit an ATM for local currency.)

Things turned out okay. The hotel cashed one travelers check, which gave us money for our various small purchases, and we used credit cards for the large ones. Once the banks opened, though, we went and cashed a couple hundred dollars worth of marks to carry around.

The thing was, it turned out to be really handy to have plenty of cash on hand. We didn't need to worry if some place took any particular card. We had cash if a traveling companion was short. It was so handy that I continued the practice of carrying a reasonable amount of cash, even after we came home.

Cash for living large (and small)

Times when it's good to have cash:

Buying something from a person, rather than a business
When you want to give someone a tip (or a bribe)
For very small purchases, such as a pack of gum
Purchases from vending machines
When you're someplace unfamiliar, such as on a trip
Anyplace that doesn't take plastic (Two examples: When I lived in Utah the state-run liquor stores only took cash; when I lived in California the places that towed your car away "at owner's expense" only took cash.)

People give various reasons why they don't want to carry cash. Some people claim that they're more likely to spend money if they have cash than if they have to use a card. That seems unlikely to me, but I can get behind any mental trick people use to help themselves be more frugal. Some worry that it will be lost or stolen. I haven't lost my wallet in more than 30 years, but I'm sure it would suck all the more if I had a bunch of money in it when I lost it. (And it would suck plenty to lose the credit cards and ID.)

It's possible to get along fine with little or no cash, especially if you live a circumscribed life (such as on a college campus or campus-like workplace, where you can put everything on a card). But if you live large there are going to be times and places where that doesn't work so well. Money isn't the solution to every problem, and even problems where money is the solution can often be solved with a credit or debit card. But there are some problems out there where the best solution is cash money. When you face one of those problems, it's nice to have some cash.

This article is from Philip Brewer of Wise Bread, an award-winning personal finance and credit card comparison website. Read more great articles from Wise Bread: