Contributor Post Created with Sketch. Beware of the MasterCard Debit Card

 

Every once in a while, you will be reminded that the world is a very dangerous place and that you must always be on the lookout for scoundrels intent on picking pockets. Witness my family’s recent experience with MasterCard.

We bank in the small town where we live; and my wife, our older children, and I have debit cards issued by that bank. We trust the institution. Whenever we have run into difficulties, the staff there have been courteous and helpful.

So we thought nothing of it when, a few months back, the bank shifted from one MasterCard provider to another. In January, one of my children used her debit card to pay tuition so that she could work on her German in the summer at a Goethe Institute in Munich. This came off without a hitch. The amount subtracted from her account was the precise amount charged by the Goethe Institute.

In May, presuming that the Wuhan coronavirus would pass and that international travel would once again be possible, she signed up for a subsequent session at the Goethe Institute in Vienna. This time, although we did not at first notice, she was charged an additional 9.99% on the transaction for what is called a MasterCard Cross Border Fee and another 9.99% for a MasterCard Currency Conversion Fee.

And when, after it became evident that international travel would not soon become an option, she sought reimbursement for both tuition charges, she was charged 19.98% on each. It was then — when I discovered that, on these transactions, she had unwittingly paid a whopping $973.10 to our bank’s new MasterCard provider in fees – that we became alert and disgruntled.

Our bank, which had not warned us of the danger, has made us good. But we were told that this would not happen again; and, unless the bank changes its debit card provider and the fees are dropped or radically reduced, we will probably take our business elsewhere.

The moral of this story is that there are predators out there and that our bank’s MasterCard provider is one of them. In such a case, my motto will be: “Never leave home with it.”

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  1. Basil Fawlty Member
    Basil Fawlty Joined in the first year of Ricochet Ricochet Charter Member

    Never use a debit card.

    • #1
    • July 26, 2020, at 12:55 PM PDT
    • 5 likes
  2. RushBabe49 Thatcher

    No fun!

    If it had been me, I would have charged the fee on a credit card, because you can more easily challenge a charge on a credit card. Most experts warn not to use a debit card for big stuff for just that reason. You also get much better records on a credit card. I would never use a debit card online, either, because if that transaction gets hacked, your debit card is a direct line to your account, and bad actors have been known to totally drain someone’s account when they get the debit card number. That cannot happen with a credit card.

    • #2
    • July 26, 2020, at 12:59 PM PDT
    • 8 likes
  3. Paul A. Rahe Contributor
    Paul A. Rahe

    RushBabe49 (View Comment):

    No fun!

    If it had been me, I would have charged the fee on a credit card, because you can more easily challenge a charge on a credit card. Most experts warn not to use a debit card for big stuff for just that reason. You also get much better records on a credit card. I would never use a debit card online, either, because if that transaction gets hacked, your debit card is a direct line to your account, and bad actors have been known to totally drain someone’s account when they get the debit card number. That cannot happen with a credit card.

    Good advice.

    • #3
    • July 26, 2020, at 1:25 PM PDT
    • 5 likes
  4. CarolJoy, Above Top Secret Coolidge

    I am so sorry that this happened to your family.

    Yet Republicans en masse have stated repeatedly that the banking institutions should not have any onerous restrictions. Why transparency with regards to attendant fees would be considered an onerous restriction, I have no idea. But the the Banks own the Congress critters, and so it is the banks, that is all financial institutions including credit cards, that make the rules.

    If your family had some problems sorting this out, just wait til she graduates and goes on to deal with Navient, the student loan “provider.” (Hopefully she has had grants and other methods to pay for college. But if not, the joys of dealing with a private institution that offshores its work load to third world people who cannot speak English, let alone discuss the in’s and out’s of various complicated loan programs will soon be an essential and almost eternal part of her life.)

    • #4
    • July 26, 2020, at 1:41 PM PDT
    • Like
  5. Richard Fulmer Member

    Everywhere you leak, the world hangs a bucket.

    • #5
    • July 26, 2020, at 1:42 PM PDT
    • 7 likes
  6. Jim McConnell Member
    Jim McConnell Joined in the first year of Ricochet Ricochet Charter Member

    Basil Fawlty (View Comment):

    Never use a debit card.

    Particularly on the internet; my bank warned me about that. With a charge or credit card, your liability for fraudulent use by others is limited, but with a debit card they can empty your bank account it is tied to.

    • #6
    • July 26, 2020, at 5:10 PM PDT
    • 2 likes
  7. Headedwest Coolidge

    The risk of using a debit card is massively higher than a credit card.

    There is a federally mandated limit of $50 personal loss on any credit card, no matter how big the actual loss was.

    Your bank will typically tell you that you have zero liability on the debit card, but you do not know how hard they will fight for you or how long it will take to untangle the situation. Meanwhile your entire bank account could be wiped out. If you autopay other bills from that bank account, you will also have to untangle all of that.

    My recommendation is to go to your bank and cancel your debit card, and get a plain ATM card instead. They will only do this if you ask. You can still draw out cash, but it prevents you from making the huge mistake of paying for anything with a debit card.

    PS: don’t ever withdraw money from your bank from one of those portable ATMs in a convenience store.

     

     

    • #7
    • July 26, 2020, at 6:34 PM PDT
    • Like
  8. The Cloaked Gaijin Member

    I don’t want a credit card. My debit card gets hacked all the time, although it has never cost me money. I rarely use the debit card much, and I have two programs on my computer that are supposed to protect me. I’ve been paying the gas station in cash for years now.

    THE BANKING WOLD HAS COME UP WITH A BETTER AND MORE SECURE WAY TO TRANSFER MONEY!!! It would save them time too.

    • #8
    • July 27, 2020, at 6:38 AM PDT
    • 1 like
  9. Phil Turmel Coolidge

    Headedwest (View Comment):

    The risk of using a debit card is massively higher than a credit card.

    There is a federally mandated limit of $50 personal loss on any credit card, no matter how big the actual loss was.

    Same rule for debit cards. See the comments in the Dave Ramsey link below.

    Your bank will typically tell you that you have zero liability on the debit card, but you do not know how hard they will fight for you or how long it will take to untangle the situation. Meanwhile your entire bank account could be wiped out. If you autopay other bills from that bank account, you will also have to untangle all of that.

    The zero liability statement comes from Visa/MasterCard. Use of either logo/system by a bank requires the bank to offer zero liability, with reimbursement to your account while the fraud is investigated. Both for debit and credit cards. I’ve been through this twice in twenty years of debit card use, and it worked precisely as promised.

    My recommendation is to go to your bank and cancel your debit card, and get a plain ATM card instead. They will only do this if you ask. You can still draw out cash, but it prevents you from making the huge mistake of paying for anything with a debit card.

    Quoting Dave Ramsey, “A debit card can do everything a credit card can do, except put you in debt.” And while some types of purchases try to hassle debit card users, they are still the better choice:

    https://www.daveramsey.com/blog/you-can-travel-without-a-card

    PS: don’t ever withdraw money from your bank from one of those portable ATMs in a convenience store.

    Can’t argue with that. More importantly, look at any card reader for evidence of a false front “skimmer”.

     

    FWIW, my experience with debit cards over the past two decades has been almost entirely positive. My personal debit MasterCards have never been hacked, despite wide use both online and offline. My business debit card has been skimmed twice (pretty sure it was restaurant staff both times), with immediate relief by my bank. I’ve been using it for the entire 17-year history of my company. I travel widely, both for business and pleasure, including internationally. I can assure you that Dave Ramsey’s travel guidance for debit cards is accurate. The criticism of debit cards is pure banking industry hysteria. They make more money when you run up debt on a credit card, and the percentage of people who can resist doing so is tiny.

    @paularahe, you were made whole, as Visa and MasterCard both demand. While their use of a crappy processor is a good reason to change banks, it isn’t Debit cards in general at fault.

     

    • #9
    • July 27, 2020, at 7:06 AM PDT
    • Like
  10. Phil Turmel Coolidge

    The Cloaked Gaijin (View Comment):

    I don’t want a credit card. My debit card gets hacked all the time, although it has never cost me money. I rarely use the debit card much, and I have two programs on my computer that are supposed to protect me. I’ve been paying the gas station in cash for years now.

    THE BANKING WOLD HAS COME UP WITH A BETTER AND MORE SECURE WAY TO TRANSFER MONEY!!! It would save them time too.

    It seems to me you have a personal computer security problem, not a debit card problem. I find people who have bad computer security habits like to blame the consequences on others’ security, when it is really their own fault.

    • #10
    • July 27, 2020, at 7:12 AM PDT
    • Like
  11. Basil Fawlty Member
    Basil Fawlty Joined in the first year of Ricochet Ricochet Charter Member

    Phil Turmel (View Comment):
    can assure you that Dave Ramsey’s travel guidance for debit cards is accurate. The criticism of debit cards is pure banking industry hysteria.

    I’ve attached a link to a less-rosy view of debit cards:

    https://creditcards.usnews.com/articles/why-credit-cards-are-safer-than-debit-cards

    I can agree that a debit card may be an option if you need to discipline yourself to avoid debt. But if you can and do pay off your credit card bills in full every month, using a debit card in lieu of a credit card makes very little sense.

    • #11
    • July 27, 2020, at 8:29 AM PDT
    • 2 likes
  12. Headedwest Coolidge

    Phil Turmel (View Comment):

    Quoting Dave Ramsey, “A debit card can do everything a credit card can do, except put you in debt.”

    I guess I’m not in Dave Ramsey’s target zone. I haven’t actually paid any interest on any of my credit cards in the last two decades.

    • #12
    • July 27, 2020, at 11:11 AM PDT
    • Like
  13. Phil Turmel Coolidge

    Headedwest (View Comment):

    Phil Turmel (View Comment):

    Quoting Dave Ramsey, “A debit card can do everything a credit card can do, except put you in debt.”

    I guess I’m not in Dave Ramsey’s target zone. I haven’t actually paid any interest on any of my credit cards in the last two decades.

    That would put you in the 2% or 3% of credit card users who actually have the discipline to pay off every month. The vast majority of the 97% or 98% who don’t, thought they would be disciplined enough.

    • #13
    • July 27, 2020, at 5:35 PM PDT
    • Like
    • This comment has been edited.
  14. Charlotte Member
    Charlotte Joined in the first year of Ricochet Ricochet Charter Member

    Phil Turmel (View Comment):
    That would put you in the 2% or 3% of credit card users who actually have the discipline to pay off every month.

    My goodness, is the percentage of monthly payer-offers really that low? I’ve never paid a dime of interest in 30 years of using credit cards. It would never even occur to me to carry a balance. And I use CCs for everything (love those points!).

    • #14
    • July 27, 2020, at 6:44 PM PDT
    • Like
  15. Phil Turmel Coolidge

    Charlotte (View Comment):

    Phil Turmel (View Comment):
    That would put you in the 2% or 3% of credit card users who actually have the discipline to pay off every month.

    My goodness, is the percentage of monthly payer-offers really that low? I’ve never paid a dime of interest in 30 years of using credit cards. It would never even occur to me to carry a balance. And I use CCs for everything (love those points!).

    That’s what I recall from Dave’s podcasts on the topic.

    • #15
    • July 27, 2020, at 6:49 PM PDT
    • Like
  16. Basil Fawlty Member
    Basil Fawlty Joined in the first year of Ricochet Ricochet Charter Member

    Phil Turmel (View Comment):

    Charlotte (View Comment):

    Phil Turmel (View Comment):
    That would put you in the 2% or 3% of credit card users who actually have the discipline to pay off every month.

    My goodness, is the percentage of monthly payer-offers really that low? I’ve never paid a dime of interest in 30 years of using credit cards. It would never even occur to me to carry a balance. And I use CCs for everything (love those points!).

    That’s what I recall from Dave’s podcasts on the topic.

    Phil Turmel (View Comment):

    Charlotte (View Comment):

    Phil Turmel (View Comment):
    That would put you in the 2% or 3% of credit card users who actually have the discipline to pay off every month.

    My goodness, is the percentage of monthly payer-offers really that low? I’ve never paid a dime of interest in 30 years of using credit cards. It would never even occur to me to carry a balance. And I use CCs for everything (love those points!).

    That’s what I recall from Dave’s podcasts on the topic.

    According to the Fed, 47% of credit card holders pay in full each month.

    https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-banking-and-credit.htm

    • #16
    • July 28, 2020, at 3:37 AM PDT
    • 1 like
  17. Phil Turmel Coolidge

    Basil Fawlty (View Comment):

    Phil Turmel (View Comment):

    Charlotte (View Comment):

    Phil Turmel (View Comment):
    That would put you in the 2% or 3% of credit card users who actually have the discipline to pay off every month.

    My goodness, is the percentage of monthly payer-offers really that low? I’ve never paid a dime of interest in 30 years of using credit cards. It would never even occur to me to carry a balance. And I use CCs for everything (love those points!).

    That’s what I recall from Dave’s podcasts on the topic.

    Phil Turmel (View Comment):

    Charlotte (View Comment):

    Phil Turmel (View Comment):
    That would put you in the 2% or 3% of credit card users who actually have the discipline to pay off every month.

    My goodness, is the percentage of monthly payer-offers really that low? I’ve never paid a dime of interest in 30 years of using credit cards. It would never even occur to me to carry a balance. And I use CCs for everything (love those points!).

    That’s what I recall from Dave’s podcasts on the topic.

    According to the Fed, 47% of credit card holders pay in full each month.

    https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-banking-and-credit.htm

    Dave’s number wasn’t a sample of any given month, it reflects those with the discipline to always pay it off. You are responding as if to a strawman. A single month of interest on a large balance (splurge-induced, perhaps, or just because you can) is a huge bonus to the card issuers compared to the fraction of the merchant fees they get to keep.

    • #17
    • July 28, 2020, at 5:29 AM PDT
    • Like
  18. Basil Fawlty Member
    Basil Fawlty Joined in the first year of Ricochet Ricochet Charter Member

    Phil Turmel (View Comment):

    Basil Fawlty (View Comment):

    Phil Turmel (View Comment):

    Charlotte (View Comment):

    Phil Turmel (View Comment):
    That would put you in the 2% or 3% of credit card users who actually have the discipline to pay off every month.

    My goodness, is the percentage of monthly payer-offers really that low? I’ve never paid a dime of interest in 30 years of using credit cards. It would never even occur to me to carry a balance. And I use CCs for everything (love those points!).

    That’s what I recall from Dave’s podcasts on the topic.

    Phil Turmel (View Comment):

    Charlotte (View Comment):

    Phil Turmel (View Comment):
    That would put you in the 2% or 3% of credit card users who actually have the discipline to pay off every month.

    My goodness, is the percentage of monthly payer-offers really that low? I’ve never paid a dime of interest in 30 years of using credit cards. It would never even occur to me to carry a balance. And I use CCs for everything (love those points!).

    That’s what I recall from Dave’s podcasts on the topic.

    According to the Fed, 47% of credit card holders pay in full each month.

    https://www.federalreserve.gov/publications/2019-economic-well-being-of-us-households-in-2018-banking-and-credit.htm

    Dave’s number wasn’t a sample of any given month, it reflects those with the discipline to always pay it off. You are responding as if to a strawman. A single month of interest on a large balance (splurge-induced, perhaps, or just because you can) is a huge bonus to the card issuers compared to the fraction of the merchant fees they get to keep.

     “Among those with a credit card, 47 percent had paid their bill in full every month in the prior year.” [Emphasis added]

    • #18
    • July 28, 2020, at 5:42 AM PDT
    • 1 like
  19. Randy Weivoda Moderator
    Randy Weivoda Joined in the first year of Ricochet Ricochet Charter Member

    Charlotte (View Comment):

    Phil Turmel (View Comment):
    That would put you in the 2% or 3% of credit card users who actually have the discipline to pay off every month.

    My goodness, is the percentage of monthly payer-offers really that low? I’ve never paid a dime of interest in 30 years of using credit cards. It would never even occur to me to carry a balance. And I use CCs for everything (love those points!).

    One time last century I had an unexpected automobile repair (I think it was the clutch in the Ford Taurus SHO) right after moving much of my savings into an IRA, so I didn’t have enough cash on hand to pay the credit card off in full that month. I paid what I could, then caught back up the next month. So I’m sure I paid at least a few dimes in interest, but not many.

    • #19
    • July 31, 2020, at 5:24 AM PDT
    • Like