questionsfees when getting cash back while using debit in…

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vote-for9vote-against

Whoa! Hasn't happened to me...yet. Would not be surprised about any new "fees", though. Heard on the news that banks are beginning to charge (more) for checking accounts, etc. Long ago I closed a savings account because they were charging a monthly fee to use my money. How rude!

vote-for8vote-against

Yes, I've seen this before and it is becoming more prevalent. It is my understanding it is up to the merchant as to the convenience fee they wish to charge.

You'll also likely see limits on the dollar amount you can purchase with debit cards as banks make less on debit purchase fees.

On a similar note many companies have started paying employees via debit cards. Typically you're allowed one free transaction -- after which charges apply.

Ultimately the banks and stores will not lose money as costs are passed onto the consumer.

vote-for9vote-against

Depending on your bank and/or account type, banks are beginning to charge consumers fees for using the debit card.

"Banks in the United States are on a trend to implement new or increased charges in the face of new regulations that take effect October 1. The new legislation, the Durbin Amendment, would see the amount that retailers pay for debit card usage (known as an interchange fee) reduce by almost 50 percent."

http://www.economywatch.com/in-the-news/think-before-you-swipe-debit-cards-to-cost-more-now.27-09.htm

When I used to work in retail, they used to encourage us to ask customers to choose the debit option in order to avoid paying the retailer credit card fee. So in order for banks to offset the new regulations, they turn it around on you.

vote-for7vote-against

I normally run my card as a debit when I'm at local Mom-and-Pop stores as a favor to them because it charges them less money. If, however, someone tries to charge me a fee for giving them my money, then they can suck on an egg. I'll do my business at the chains since they don't charge a fee.

vote-for6vote-against

Doesn't surprise me as more and more places are trying to get their little piece of the action.

In fact, confusion about debit card fees, as well as the lack of consumer protections if something goes wrong, are the main reason reasons why I rarely use a debit card (about the only time I do is when Chase is running a promo and the debit card rebates are better than the credit card rewards).

vote-for4vote-against

I always assume there's a fee with it so I never use it. It's not like I ever use cash anyways.

vote-for7vote-against

Pretty bad considering the Dodd-Frank provisions will actually limit fees on debit transactions, meaning that it's even more baseless that the business is passing along fees to you since they're paying less to their bank.

The store is ripping you off, not your bank. Next time bring a jar full of pennies.

vote-for5vote-against

The issuing bank or credit union usually doesn't get any fee when the card is used on the debit side; the fee is based on the credit side of the card as an offset to the expense of handling all the billing services. This is the reason you're being asked if you want cash back -- the merchant builds the processing fee into his price base, so if you're not "costing" the business that fee, it's reasonable for you to ask for a discount on the price. If I'd been faced with a fee to use the card on the debit side, my next action would be to call the bank/credit union that issued the card to ask if that's an acceptable merchant practice.

In Florida, it's illegal for businesses to charge a customer a fee to use a credit or debit card. It will be interesting to see how that all shakes out in light of the new federal regs.

vote-for11vote-against

Given a choice, I would use credit instead of debit. Then, when you get your monthly bill, pay the whole thing off.

Advantages:
1. You keep your money in your account until the last minute and might get some sort of interest (probably low right now though).
2. If you have a dispute with a debit card, it's already too late. The merchant has your money. With a credit card, the merchant has the bank's money and yours is still in your checking account. You do not have to pay for the charge until the dispute is settled with a credit card.
3. If you purchase something with a debit card and use more money than what is in your checking, you may be hit with an overdraft fee. On a credit card, if you attempt to go over your limit, the transaction should be declined.
4. If there is fraud on your account, a debit card can set you back as much as $500 but a credit card is limited by federal law at $50.
5. There are more reward programs available with Credit than Debit.

vote-for6vote-against

@cengland0: I think many people here are using the term "debit card" to mean what is usually called a "check card," which carries a Visa or Mastercard logo. When using those cards on the credit side, users have the very same protections regarding fraud or disputed charges as do users of traditional credit cards.

vote-for7vote-against

@magic cave: They have the same right but the dispute process against a merchant or fraud works differently.

With a credit card, none of your money leaves your checking account until the dispute is settled. If it is settled in your favor, you never pay, otherwise, you pay it after the dispute.

With a debit card, your money has already been taken out of your account. Then, you have to dispute the charge and it takes several days for the money to be put back in your account.

Also, even though you are protected, you can still be charged up to $50 for fraud on a credit card and $500 on a debit card. That is far from being the same.

I have seen instances where a merchant needed to charge $10 for something but accidentally charged $100 or $1000. Of course that was a mistake (and you can get the money back eventually) but that money would come out of your checking immediately with a debit card and that could cause you to bounce other charges and then get overdraft fees.

vote-for2vote-against

@cengland0: I handle credit and debit card disputes and fraud claims as part of my job at a very large credit union. I'm pretty familiar with the dispute process. Are you aware that most instances require the financial institution to give the cardholder provisional credit while the dispute process is being worked through?

vote-for2vote-against

Just got charged a fee by PayPal. Sent a friend some money for an item bought for & sent to me. Did the same thing in July. No charge then. Guess PayPal's jumped on the 'fee' wagon. Next time I'll mail a check instead. ::Disappointed sigh::

vote-for2vote-against

@magic cave: "In Florida, it's illegal for businesses to charge a customer a fee to use a credit or debit card. It will be interesting to see how that all shakes out in light of the new federal regs."

Same thing in NY, but it is perfectly legal to give people a discount for cash. Whether it is the same thing or not is moot and only matters to someone not smart enough to do it the legal way.

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@baqui63: I kind of like the "okay to give a discount for cash" option in terms of what sounds like a better deal for consumers. For merchants, though, it's probably a major hassle. I explored all the options we're likely to use (American Express charge card vs. rewards-linked credit card vs. check card) and ultimately switched most of our purchasing to the credit card. Pretty much everything that can go on plastic goes on it, we pay it off every month, and we get a wide variety of gift cards with the points. I haven't had much success yet in finding or asking about discounts for cash, but that will be our next analysis.

vote-for3vote-against

i've seen the "discount for cash payments" a lot in gas stations, it seems popular for them mostly. for example if you've ever used a Liberty gas station with the cheap gas, they advertise their cash price and put their credit/debit price in tiny print. i think 5 cents more per gallon.

i'm loving all the info here! for the record, the actual payment was always free, it's just the cashback that Dollar Tree wanted to charge me for. i cancelled the cashback and didn't pay anything, thankfully

vote-for4vote-against

@magic cave: have you heard about this? B of A is rumored to start charging $5 a month for people using their B of A card as debit!

http://money.msn.com/top-stocks/post.aspx?post=c8062c4c-8042-44b4-a118-0b82e1637105

argh!

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@gmwhit: It used to be only the person receiving the money got charged but Paypal is changing their fee structure. Paypal now charges a fee if we give someone a refund. grrr

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This is why debit card fees are going up:

The Federal Reserve ruled in late June that fees for debit card purchases could not exceed 21 cents per swipe, with a small amount tacked on based on the amount of the purchase. Previously, banks and card companies charged retailers an average of 44 cents, using a formula of 1.14 percent of each transaction.

vote-for2vote-against

@w00tgurl: Yes, I read the news about BoA and their debit-card fee. My first thought was that their customers would revolt, but upon reflection I can to the conclusion that for many people (especially the under-30 users0 the debit/check card is so ingrained in their way of life that they'll grumble a little and then ignore the fee. Many of my credit union members use their check cards 12-20 times a day; I've seen charges as low as $0.08 on the card. if they lose the card, there's major upheaval when they realize they'll need to carry [shock] cash with them till the new card arrives.

On the other hand, we've seen a significant uptick in membership in the last 2-3 months, and anecdotal info from my co-workers seems to indicate a large percentage of new members were Wachovia customers who are fed up with the multitude of fees at Wells Fargo (which bought Wachovia recently). I'm now waiting to see if we see a similar influx from BoA.

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@ohcheri: So as a merchant, you pay both fees on both incoming funds and outgoing money, too? Wow, that's a bummer.

I used to hang out several years ago on a usenet newsgroup for eBay sellers, and while many people complained about Paypal's fee structure, the old-timers said PP was still lower than most other merchant accounts they could use. Maybe not so much these days, though, if they get you both coming and going!

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@magic cave: the fees can definitely work to your benefit, since people are more willing to make the switch to credit unions instead. i loooove credit unions, so i wish you guys lots of growth. right now i primarily bank with USAA which is a bank bank, but in my eyes they're like a huge credit union. if i didn't have them, i'd bank with just credit unions. i don't know why people either don't know about them or are just discovering them? might start a new question about just that..hmm..

@ohcheri: the paypal fee is bad news for me also. i'm a very casual paypal user, and sometimes got payments for freelance tutoring via paypal from students. neither of us would pay a fee, and it worked out great just using the personal payment way.

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@magic cave: Merchant fees are a big expense, but we take full advantage of credit cards that pay rewards points so we get some of it back :)