Credit, Debit, & ATM Cards

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Credit cards are nothing more than pre-approved loans. When you charge something on a credit card, the bank issuing the card lends you the amount of the charge and you repay the loan as you have promised in the agreement you signed to open the account.

Credit Cards are Not Free

CARD Act Protections

Federal law provides additional protections to consumers. The Credit Accountability, Responsibility and Disclosure (CARD) Act provides the following additional protections for consumers:

Here are some tips when becoming a credit card user:

Debit Cards

Using a debit card is like paying with a check, only the money comes immediately out of your bank account electronically. If there isn't enough money in your account to cover the debit, your bank may still honor the charge, but will probably add costly overdraft fees. Here are some tips when using a debit card:

Blocking
In some debit transactions, consumers may find more money initially charged against their accounts than they expected. This is a legal business practice called "blocking".

Blocking most often occurs when you check into a hotel, rent a car, or pump gas. The company usually contacts your credit card issuer with an estimate of your bill. This reduces the amount available in your account. For example, you use your card when you check into a $100-a-night hotel for five nights. The hotel will put a hold on at least $500 and may add charges for "incidentals", like food or beverages, to the blocked amount. If you pay your bill with the same card you used at check-in, your final charge most likely will replace the block in a day or two. If you pay your bill with a different card (or with cash or a check) the block may last up to fifteen (15) days after you've checked out because the card issuer doesn't know you paid another way. Before using your card, ask the amount that will be blocked, what determines that amount, and how long the block will remain on your card.

ATM Cards

An ATM is a PIN-based card also known as a bank or cash card. The card is issued by a financial institution that allows you to withdraw money from your account, but only through an ATM machine. Unlike debit cards, ATM cards do not have the Visa or MasterCard logo and in most cases, may not be used to make store purchases directly.

You can use your ATM card to access account information, make withdrawals or deposits, or transfer funds between your checking, savings, credit card, and line of credit accounts.

ATM cards give you easy access to your money, but be careful. That easy access might cost you. For example, if you withdraw money from your account at your own bank's ATM, you probably won't pay any fees for that transaction. However, if you withdraw money from a different bank's ATM, you could get charged a fee from that bank as well as from your own.

Here are some tips when using ATM cards:

Credit Card, ATM, & Deb Card Loss

If your credit, ATM, or debit card is lost or stolen, federal law limits your liability for unauthorized charges. Your protection against unauthorized charges depends on the type of card - and when you report the loss. The Fair Credit Billing Act (FCBA) and the Electronic Fund Transfer Act (EFTA) offer protection if your credit, ATM, or debit cards are lost or stolen.

Credit Card Loss or Fradulent Charges. Under the FCBA, your liability for unauthorized use of your credit card tops out at $50. However, if you report the loss before your credit card is used, the FCBA says you are not responsible for any charges you didn't authorize. If your credit card number is stolen, but not the card, you are not liable for unauthorized use.

ATM or Debit Card Loss or Fradulent Transfers. If you report an ATM or debit card missing before someone uses it, the EFTA says you are not responsible for any unauthorized transactions. If someone uses your ATM or debit card before you report it lost or stolen, your liability depends on how quickly you report it. Reporting times for liability are:

Credit Card Fee - Checkout Fee. In 2013, a court settlement between retailers and the credit card industry resulted in merchants being able to pass their payment processing costs to consumers who pay with a credit card. In South Dakota, a merchant who chooses to exercise this surcharge, sometimes referred to as a "checkout fee," could increase your credit card purchase amount by as much as 4% (the maximum allowed). Under the settlement:

Card Scams. A credit card scam can come in many forms. For example:

Don't Become a Victim -  Do Your Homework

If you are buying something over the telephone or internet and want to use your credit card, make sure you know and trust the other party. If you want to provide your credit card details to a telemarketer, take their name and call them back on a phone number you find independently (i.e., not a number they give to you).

Check over your credit card and bank account statements as soon as you get them to ensure that no one is using your account without your permission.

Here are some tips to avoid being a victim:

OPT-OUT OF PRE-SCREENED OFFERS OF CREDIT

The three (3) major credit reporting agencies offer a toll-free number that enables you to "opt-out" of having pre-screened credit offers sent to you. By calling 1-888-5-OPTOUT (567-8688) or visiting ww.optoutprescreen.com, your name will be removed from the mailing list for five (5) years. Your request is shared with all three credit reporting agencies. However, it is important to follow up with all three (3) credit reporting agencies to make sure this has been done.

In addition, you can instruct the agencies to not share your personal information for promotional purposes, which is an important step towards eliminating unsolicited mail. To prevent your personal information from being shared, send a letter, call, or e-mail to each of the credit reporting agencies.

A "prescreened" offer of credit? What's that?
Many companies that solicit new credit card accounts and insurance policies use prescreening to identify potential customers for the products they offer. Prescreened offers, sometimes called "preapproved" offers, are based on information in your credit report that indicates you meet criteria set by the offer.

How does prescreening work?
A creditor or insurer establishes criteria, like a minimum credit score or minimum annual salary, and asks a consumer reporting company for a list of people in the company's database who meet the criteria.

Can prescreening hurt my credit report or credit score?
No. There will be "inquiries" on your credit report showing which companies obtained your information for prescreening, but those inquiries will not have a negative effect on your credit report or credit score.