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Debit cards, while convenient to use, can often pose a number of risks to your financial security. One of the risks is the ease with which you can lose track of how much you’re spending.

If you’re like most people who use debit cards, you don’t write down each purchase. This is the fastest way to spend money you may not actually have.

Once your account is overdrawn, the bank will assess an often hefty overdraft fee for each purchase that overdraws your account. Common sense might dictate that the bank would simply decline any debit that overdrafts your account.

But with overdraft fees as high as $36 per overdraft, this is one of the primary ways that they actually make money. Also, most debits don’t clear your account until after close of business. So if you make several purchases over the course of a day that overdraw your account, this fact is not calculated by the bank until the end of the day.

One of the best ways to avoid overdrawing your account with your debit card use is to make sure the savings in your account far exceed the amount you may spend in a day. For some people this is $600, for others it might be $1,000.

You can also avoid accruing overdraft fees by signing up for your bank’s savings account overdraft protection. If you have a savings account with the same bank that issues your debit card, the bank will automatically transfer just enough money from your savings account to cover the overdraft or overdrafts you make with your debit card.

Essentially, your savings account will simply help you avoid being charged those pesky overdraft fees. If you choose this option, however, do make sure that you have enough money in your savings account to cover any possible overdrafts.

Another risk that comes with using debit cards is the lack of fraud protection. If a thief is able to use your debit card, the money they take or spend is deducted from your account immediately. Thieves do not even need your actual card, as long as they have the card number, they can make online purchases.

Even after you contact the bank to let them know of the fraudulent use, the money is already gone. Legally, banks have up to 20 days to restore this money to your account, while they investigate the fraudulent use.

If you use a debit card, rather than a credit card, you are putting yourself at risk in a couple of ways. For one, debit cards do not help you build good credit in the way that credit cards do.

Also, you have very little transaction protection when you pay with a debit card. Credit cards offer purchase and dispute protection.

Debit cards have a daily maximum limit on purchases, usually between $200 and $500. If, for some reason, you need to purchase something over your maximum daily limit, you cannot. Keep in mind that this is a cumulative maximum spending cap. So throughout one day, you are limited in what you may spend.

Some merchants, such as hotels, will accept your debit card as a form of payment but they create a “phantom” charge up front to cover any possible fees.

So even though your hotel room rate may be $100 per night, the hotel is likely to hold $500 from your account until several days after you check out of the hotel. This money is not available to you while it is being held as a “phantom” charge by the hotel.

Rewards offered by credit cards are very common. These range from airline miles, to cash back, so simply using those cards, you are receiving something in return. This is not the case with debit cards. There are very few debit cards that offer any additional rewards.

safety of your financial information

With the credit card trend gaining fast popularity, most of us shop with it and pay for the hotel bill, at restaurants, for movies and so on.  There are thousands of monetary transactions which get affected everyday and get stored.  It is indeed quite perturbing at times that these credit card companies and Banks have access to your credit card pin number.   Hence, to be on the safe side, you need to ensure that you safeguard yourself from these problems.  Credit card fraud is becoming so common nowadays that one needs to be alert when sharing financial and personal information to outside parties on the internet.  Never divulge any important financial matters unless you are absolutely sure about who the individual or the company is.

Practically every one of us makes payments through these plastic cards.  Credit cards and debit cards have become common name in big shopping malls and food outlets.  When swiping the credit card, you need to be really quick.  Always cover the details of the credit card so that no one is able to see your signature and other details.  This helps to stay safe and no one will be able to view your identity and the credit card information as well.

Secondly, you need to be very choosy when it comes to giving credit card details and information to another person.  There are many individuals who are on the lookout for a target.  Ensure that you use your credit card at a reliable and safe place.  The outlet where you swipe your card should be an authentic and trustworthy one.

Thirdly, you need to be aware of the various phishing online scams.  There are phishers who create false websites and will rob you of your hard earned money.  Never give personal details like your Bank details, credit card number etc as they will then use these cards.  Many people have lost big money this way and gone into liquidation.

You not only need to swipe your card quickly, but also need to sign quickly so that no one is able to see how you sign.  Similarly, take your card back quickly and sign on the receipt as well.  When signing the receipt, make sure that there is no one watching you.  If your signature is an easy one, then it will be very easy to forge.  Hence, be careful not to openly sign in front of everyone.

People tend to forget their pin number and always make the mistake of writing it behind their card.  Never do such a mistake as you could land in serious problems.  You are not supposed to write down your pin number anywhere.  Just memorise this number and also refrain from giving this important number to any person, however close you are.  There are many cases of credit card fraud which have been reported and hence one need to exercise caution and take care while giving important details.  Prevention is always better than cure and hence be cautious and careful in all your financial dealings.