“I recently received a big surprise when I looked through my bank statements. I didn’t realize that I was paying so much for transaction fees when I used my debit card. Between getting cash from the ABM, paying for goods and using online banking I paid over J$400 in charges last month! Do you have any tips how I can use my debit card smarter?”

Debit cards are rapidly gaining popularity as a preferred medium to pay for goods and services. They are more widely accepted than cheques, and they remove the hassle of carrying large amounts of cash. However, when plastic replaces paper, this convenience can come at a big cost.

How do they work?

Debit cards provide a direct line to your bank account. Whether you use the card to get cash from the automated teller machine (ATM), or to pay for your purchases, the money is immediately deducted from your account. A direct debit card uses a personal identification number (PIN), which is your secret code to access your account. The PIN is your protection to prevent unauthorized use of your debit card.

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While a credit card gives you the opportunity to pay for goods later, if you don’t have the money in the bank, a debit card won’t help you. However, a debit card helps to ensure that you’re only spending what you actually have, and not incurring debt to fund your expenses.

Check out the charges

An important way to control your debit card costs is to find out what are all the fees that are charged whenever you use the card. A check with one major bank revealed the following charges:

Telephone banking (for bill payment) J$10
Merchant point of sale (for shopping) J$12
ATM from their location (for cash & enquires) J$20
ATM from another network J$35

This institution offers a few free electronic transactions per month and any subsequent transactions would be charged against the account.

So you can see if you used your debit card every other day to get cash, you could be accumulating a lot of charges! It would be better to budget your cash requirements and only visit the ATM once per week.

Check with your financial institution to see if they have any free transactions limits and plan your debit card usage accordingly. You can also call around to different banks to compare their charges, to see if you can get a better deal at another institution.

Debit card costs are not borne by the shoppers alone. Many merchants are feeling the pinch as the banks also charge them for their customers’ use of the convenience card.

Some have put restrictions on debit card sales, by establishing minimum amounts for use of the card. I recently noticed a supermarket with a minimum as high as J$500! Keep some cash on you for small purchases, so that you don’t have to buy more than you planned just to meet the minimum amount.

Protect your card

As debit cards provide direct access to your bank account, it important to protect your money by being careful with your card. Most financial institutions provide some safeguards by limiting the amount of cash you can withdraw daily. There is also usually a spending limit for point of sale transactions.

Here are some other tips to keep your money secure:

1.   Keep your PIN private- don’t share the number with anyone.
2.   Never write your number on paper and keep it in your wallet.
3.   Don’t use common numbers like your birth date or phone number for your PIN.
4.   If your card is stolen or lost, report it immediately. If there is any fraudulent activity after you’ve made your report, the responsibility for your loss lies with the bank
5.   Don’t be tricked by emails or phone calls that request your account number and PIN. Your bank will never request personal information over the internet or on the telephone.
6.   If possible, get online access to track your account regularly. This way you can spot any discrepancies before your statement arrives.