Debit cards catching on as viable payment tool

ORIGINALLY WRITTEN CYNTHIA MARTENS
If you’re still using a checkbook instead of a debit card for your purchases, you’re in a growing minority.

“Check writing is getting to be a thing of the past,” said Juanita D’Albini, customer-service representative for Central National Bank in Hillsboro.

The name check card and debit card mean the same thing and are used interchangeably in the banking industry.

“Check cards provide check-less checking,” D’Albini said. “A debit card is a lot easier to carry around than your checkbook. And as long as you safeguard your (personal identification number) and use it responsibly, it’s a lot better.”

A PIN is the number assigned to that card, must be kept confidential and can be used by the designated users for authorized withdrawal of money from a checking account.

A debit card looks just like a credit card, but it works like a check, said Dawn Helmer, assistant vice president/operations with Emprise Bank in Hillsboro. And it operates like cash or a personal check.

Two major credit card companies-Visa and MasterCard-have their logos on the debit cards available locally.

Visa Check Cards can be obtained at Central National, Emprise, Great Plains Federal Credit Union and Commercial Federal. A MasterCard debit card is offered at Hillsboro State Bank.

“To the merchants, a check card is just like a credit card-they get their immediate credit,” Helmer said.

Although debit and credit cards look similar, they function differently.

The debit is a quick transaction between the merchant and the customer’s personal bank account.

A credit card is a means of paying later, and a debit card is a way to pay now.

“The only difference is instead of building a credit account that you pay off each month, this is immediately debited out of your checking account,” Helmer said.

“You have to have the funds when you make the purchase.”

At the five banks in Hillsboro, all offer automated-teller machine capabilities, but not all local banks have ATM machines in their buildings.

At terminals set up in a variety of locations, an ATM card gives users 24-hour access to withdraw money from their checking or savings accounts.

Customers in Hillsboro have two choices, an ATM card alone or a combined ATM and debit card.

“I think sometimes people don’t realize that their Visa Check Card does everything an ATM card does,” Helmer said.

“You can use your Visa Check Card at the ATM exactly like you can an ATM card.”

At Emprise Bank, customers can have up to three checking accounts and three savings accounts tied to one card.

“If you have multiple checking accounts, you designate which one you want to be the the primary account,” Helmer said.

“You cannot have a check card without having a checking account, and all purchases have to come out of that primary account.”

To obtain a debit card, customers fill out an application form similar to a credit-card application.

“Because it does have a Visa logo on it, we do have to follow Visa regulations,” Helmer said. “We run a credit check for our own liability-it’s an application to approve.”

In the case of a married couple, they can choose to both be signers on a debit card.

A debit card may be used nationally and internationally because of its tie with the two major credit-card companies.

Depending on the merchant, customers have two optional ways to use their card-with or without using their PIN.

Whether purchasing merchandise or paying for services, they can swipe their card and enter their PIN. If the funds are available, the transaction is confirmed and completed.

Bank officials suggest customers memorize their PIN and take security precautions-keep it separate from the card.

Customers are also instructed to either write the transaction information down in their check register or retain the sales slip and record the purchase at a later time.

The second option is to omit using the PIN and sign a sales slip that looks similar to a credit-card receipt.

“I can go to Wal-Mart,” Helmer said. “One day, I can use it, swipe it through and put my PIN in. And the next day, I go in and I forgot my PIN. I swipe it through, but I say I want to sign.

“Either way, it’s the same card, and it comes out of my account the exact same way.”

Not all local businesses are set up to accept a PIN, so they run the transaction using the second option-like a credit card.

“You can still use it, and just sign your name,” Helmer said.

Fees vary according to the regulations established at local banks, but they are minimal.

The only bank that charges an issue fee is Emprise. Customers are charged a one-time fee of $5 when they apply for a Visa Check Card.

“But you’re not charged for a transaction, and you’re not charged when your card is renewed,” Helmer said.

And that policy was consistent throughout the local banking industry.

At Hillsboro State Bank, there is a certain usage limit on the MasterCard Check Card.

“The only fee involved is if you don’t use it at least four times a month,” said Shelley Rooker, administrative assistant. “It’s a $1 charge, and that’s a point-of-sales purchase, not an ATM transaction.”

The other banks didn’t have any restrictions on the number of times a card is used in a month.

The amount that can be withdrawn on a debit card is the amount in the designated checking account, but all local banks set a maximum withdrawal limit that ranged from $500 to $1,500 per day.

And some local bank officials said they could temporarily increase that limit if the customer contacted the bank in advance and asked to be able to withdraw more money for such things as vacations or larger purchases.

Liability for stolen cards generally followed the same regulations as those set for the credit-card companies, Helmer said.

According to information obtained from www.bankrate.com, the following are some of the advantages of using a debit card:

Obtaining a debit card is often easier than getting a credit card, if the customer qualifies to open a bank account.

Unlike writing a check for purchases or services, debit cards do not require giving out personal information, such as driver’s license numbers or date of birth.

It doesn’t require carrying a checkbook, cash or traveler’s checks.

It’s often more readily accepted in other states or countries than a check.

Returned merchandise or canceled services are treated like cash or a check, and customers usually get cash back instead of a credit.

The bankrate site offered the following disadvantages when using a debit card:

They do not offer a grace period, such as with credit-card purchases. They are a pay-now transaction.

They can make balancing an account difficult if the customer does not keep the receipts and record the transactions in a timely manner.

They may offer less protection than credit cards for goods that aren’t delivered, are defective or are misrepresented. But as with credit cards, mistakes can usually be disputed if done within 60 days.

All banks contacted said the popularity of the debit card is growing, and they expect to see it continue to grow.

“It’s the convenience of just carrying that card,” said Kathy Decker, branch manager at Great Plains Federal Credit Union.

“And when you get to a business and you use a debit card, you don’t have to give your life history in order to have your check approved.”

John Dalke, loan officer at Commercial Federal, said the usage of the debit card in Hillsboro has increased as people become more aware of it.

“I would say the checking customers we have tend to be very comfortable with things like debit cards.”

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