Banking 
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Why debit cards make you more vulnerable to fraud than credit cards

Debit cards can have pretty kitties, serious fraud riskThere are a lot of good things about using debit cards. They force you to limit your spending to the money you have on hand, they don’t leave you vulnerable to revolving debt and interest charges that credit cards can, and you can get pretty kitties printed on the front if you want.

One big downside, though, is how vulnerable they leave users to fraud.

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 Family 
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Kids and Money: Is a Prepaid Debit Card a Good Idea?

Payment with plastic has become the standard in our society. Even if you don’t use credit, chances are that you swipe a debit card. Getting used the idea of paying with plastic, and learning how to deal with money that is more abstract than cash, is important. Teenagers need to learn how to track their spending, even when they don’t hand over cash. This important lesson is one of the reasons that we are seeing a rise in marketing for prepaid debit cards.

But are prepaid debit cards really the answer?

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 NEWS 
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Durbin Amendment’s First Victims: Debit Reward Programs

The Durbin Amendment, which would limit debit interchange fees on debit cards to a mere 12 cents, is set to take effect soon but large banks are already cutting reward programs in anticipation of the amendment.

If you have a reward debit card from a large bank (over $10 billion in assets), then expect to see them kill your reward program. Wells Fargo is no longer offering the program to new customers as of March 27th for Wachovia customers and April 15th at Wells Fargo customers (existing customers will keep the program for now). JPMorgan Chase told its customers that the program will end on July 29th. SunTrust will end its program April 15th. (link)

Curious if you’re bank is a large one? This list from the National Information Center shows the top fifty bank holding companies and each one has over $10 billion in assets. What you won’t find on this list, usually, are those smaller regional banks that offer reward checking accounts, which need debit interchange fees to pay for the higher yields.

The writing is on the wall: If you like your debit reward cards, you’ll need to find a smaller bank.


 NEWS 
50
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Durbin Amendment: Limit Interchange Fees to 12 Cents

The Durbin Amendment to the Dodd–Frank Wall Street Reform and Consumer Protection Act is set to be official in a little over a month. The amendment would have the Federal Reserve limit interchange fees on debit transactions, the fee a bank charges to process card transactions, to a mere 12 cents. It’s a proposal they put out for comment late last year and it’s drawn a lot of criticism. There are two alternative interchange fee standards:

  • Fee standard based on the costs with a safe harbor at 7 cents per transaction and a cap at 12 cents per transaction.
  • A standalone cap at 12 cents per transaction.

By the Fed’s own calcluation, this is 70% lower than the 2009 average and the rule is set to take effect on July 21st, 2011. In addition to putting this 12 cent hard cap, the regulation would prohibit an issuer from restricting on which networks the debit transaction could be processed

What does this mean for consumers? If the banks are to be believed and 12 cents is below the cost of doing business, banks will severely curtail the use of debit cards or find some other way to charge for the convenience of debit cards, which generates $16 billion a year. If you rely on your debit card, you may find that there will be new fees or restrictions associated with it if the banks are to recover some of this revenue.


 Personal Finance 
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Don’t Change Yourself, Change Your Financial System

How old are you? Unless you’re under the age of 20 or 25, chances are you will not change.

I don’t care how much willpower you think you have, the vast majority of people will not change their habits once they’ve become an adult. This is why the government created rules to prevent cigarette companies from marketing to minors (Joe the Camel?).

In fact, your only chance of changing usually comes on the heels of a very “shocking” event. How many stories have you heard of people getting their finances on track because their brother’s house was foreclosed? How many people lose weight because their doctor warns of impending health problems? While I don’t wish a “shocking” event onto anyone, sometimes we all need one to get us back on course!

In the absence of a shock, what can you do to help your finances? Don’t try wholesale changes to yourself or the way you do things, change your financial “system” so that it works better with You. Below are a few ideas to help you do this.

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 Credit 
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8 Reasons Credit Cards Beat Debit Cards

Debit Card hologramThis may be sacrilegious to say, as a personal finance blogger, but I’ve never been a fan of debit cards.

I’m biased though. I think I prefer credit over debit because because I’ve never been in credit card debt. I’ve never been on the business end of the tactics used by the credit card industry. I credit to a fear that my mom would be angry with me, rather than my own self-restraint, but either way I have never paid a penny of interest to a credit card company. :)

That being said, here are eight reasons why I think that credit cards are better than debit cards, which I hope you’ll enjoy arguing with me in the comments!

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 Banking 
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Five Money Saving Bank Hacks

Bank Hacks In Your FavorBanks offer a lot of services and features. You probably know most of the popular ones. Heck, you probably know most of the not so popular ones. However, I am pretty certain that there is at least one thing on the follow list that you didn’t know about before. And if I’m wrong, I invite you to look at these 7 Unwritten and Often Forgotten Credit Card Secrets, and hopefully between the two you’ll learn something new that will save you some money in these difficult times.

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 Credit 
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The Basics of Debit and Credit Cards Explained

Smiling Girl, Happy with Credit CardsWelcome to the second edition of the Foundation Series (learn more about the Foundation series), a series of posts that discusses the very basics of personal finance and hopes to set a “foundation” for a solid financial approach to life. This edition tackles a topic that so many of us are introduced to with little preparation, debit and credit cards.

Part of the reason why we don’t get a gentle introduction is because it’s not in the interests of credit card companies to educate its customers. They introduce cards when you’re most impressionable, like the first few days of college. They give you the terms and conditions in microprint and include dozens of pages, virtually assuring that you won’t read every word. They add in counterintuitive business practices, like universal default and double cycle billing, that appear to go against all conventional wisdom about borrowing. They do this not because they’re trying to screw you, they’re doing it because their responsibility is to the shareholders of their company and the almighty dollar. They’re not trying to bankrupt you, but many aren’t going to hold your hand and, let’s be honest, we’re all adults capable of making our own decisions.

I won’t hold your hand either (sorry! :) ) but here’s a brief guide that should prepare you more than a hundred pages of 4 pt. font claiming to be terms and conditions!

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