Not long ago using a debit card was considered a wise choice for those who wanted to avoid credit card debt but wanted the perks of using something other than cash or checks. But more and more avoiding extra charges is becoming difficult as banks are charging consumers’ monthly fees for using their debit cards. Banks have gone to this strategy because the amount they can charge stores for transactions has been capped, and they are looking to make up the lost revenue.

Fees are ranging typically from $3 to $5 a month, or up to $60 a year, and banks are suggesting using a credit card instead. For those who are perfectly disciplined and can be sure to pay their balance in full each month that may be an option, but it leaves little flexibility for those who wanted to avoid the temptation of a credit line and keep themselves from incurring credit card debt.

It is one thing to make a sound choice and decide to get a credit card when you are fully prepared for it, but being pushed into the choice in order to avoid charges isn’t ideal. Using credit cards can lead to excessive debt that can place a burden on later financial options.

Those who do keep their fee-based debit cards also need to be careful because if they forget when their monthly fee is deducted it can lead to additional overdraft charges that could potentially be much more than $60 a year. Some suggest credit unions, which may offer more interest and fewer fees than traditional banks, but often require some sort of affiliation, such as working for a particular company. Cash is also an option, but beware of ATM and other fees, as these will add up quick, especially if you are using machines that don’t belong to your bank.

Above anything when it comes to financial security is knowing the details about any bank or card you use. If you are uncertain about your debit card and whether fees are attached to it, don’t hesitate to talk to your bank.

Source

USA Today: “Debit card fees are coming: How to Avoid Them,” Sandra Block, Oct. 4, 2011