Never use a debit card to pay at the pump

[eridani]

http://64.233.167.104/search?q=cache:MskVj7Fg7TIJ:www.clarkhoward.com/library/tips/banks.html+debit+cards+gas+pump+%22Clark+Howard%22&hl=en

Have you ever used a debit card at a gas station to "pay at the pump?"

Say you fill up $20 or $30 worth. Then, two days later you get a notice from your bank that you've bounced some checks. How can that be, you're probably thinking. But, what you may not know is that when you use a debit card, gas stations have the right to overcharge you a certain amount to ensure they get their money. Sometimes it's only a $5 or $10 hold. But it's up to each gas station to decide how much to hold in your account, and some put a $75 or $100 hold on the account. And, they also decide how long to hold that money. Some hold the money for up to three days, so that can really hurt you. If you want to use a debit card at a gas station, do not pay at the pump. Pay inside the station and you'll be charged for only what was purchased.

Or, the better alternative is to use a credit card. If you have a rewards card, you get the cash back or gas reward to boot. Clark has heard tons of horror stories about fake Visa and Master Cards. With these cards, the biggest problem usually involves things of a clerical nature. With a credit card, if a clerical error is made it's corrected before your statement goes out and there is nothing really to worry about. But with a debit card, once someone makes a mistake, it takes a lot of work to get it resolved. First of all, it's unlikely that you'll get any of the money back once it's been removed from your account. And under Visa and MasterCard guidelines, the bank has no duty to pay you for any of the insufficient funds charges you may incur.

[lenidog]

1. I have seen it happen many times when I worked as a CSR

rep at a bank. The other thing should NEVER EVER do is go to one of those payday loan places. If you can't make your payment on time they will try and take your money by hook or by crook. I have seen them try to take a payment out of peoples accounts 5 or 6 times in the course of a couple days. Hell, even loan sharks are better than that scum.

[nebula]

2. "Never use a debit card to pay at the pump"

does that apply to (visa) check cards as well?

[RebelOne]

4. Check cards and debit cards are the same thing. n/t

[CAMANY]

37. No they are not

a "check card" has a visa or mastercard logo.

A debit card can withdraw money in an ATM fashion. (PIN required)

The check card is a combined debit card AND it can function on the visa or mastercard network.

I just instant messaged a friend who's a teller to confirm the article. It's a BS article.

[Freddie Stubbs]

39. Yes, but I suppose it depends on HOW you use it

When you swipe the card you are prompted to select debit or credit.

[vpigrad]

3. It is usually a $50 hold...

and they do that whether or not you use a debit or credit card. You just don't usually notice the ones on the credit cards since it's against your credit and never shows-up on paper. You will notice it if it puts you over your limit then you try to charge something else. Aside: this is why if you pump more than $50 worth of gas at most stations, you'll have to go inside to do the transaction since they only did a $50 hold.

Of course, this is a minor problem with debit cards. The real problem is that you are not protected from fraud at all. The bank or a theif can steal every single penny from your account and you have no legal recourse against the bank. With a credit card, you're only out the first $50. You should never have a debit card and should certainly never use one and absolutely never use one at a gas station. I work part-time for a "forensic" CPA, and he has been involved in many cases where people had every penny in their account stolen with a fake debit card or bank transaction, and almost always the bank wins and the customer loses. Use a real credit card. There's a reason the banks are pushing debit cards so hard. They know they don't have to responsible for your money when you have a debit card.

[Deja Q]

5. Use the debit card as a credit card.

:-)

[blondeatlast]

22. Wise thinking--I always do.

I hate getting cash back when I return something, so I always use my Visa checking card as a credit card. The money goes right back into my account that very day.

[0007]

24. I do too!

I made the mistake of using my debit card instead of my credit card to purchase an on-line buy. Luckily I was dealing with an honest company or I could have been taken for a ride.

The world is full of trickery!

[B Calm]

6. My god, they're already price gouging us once. Greedy Bastards!

[Kingofalldems]

7. Are you talking about

a card that you have to use a pin#? I have a card that can be used either way, as credit or as an ATM.

[livinginphotographs]

8. Um, in my experience they only hold $1 to see if the account is active.

Then they release the hold and take the total charge out after a few days.

This seems like a lot of freak-out over nothing.

[baldguy]

9. The hold & authorization procedures are the same for debit & credit cards.

The system has no way of knowing which kind of card you use.

Fraud is a problem with any bank card. The only differences are in the way your bank deals with it. Some are good, some are bad. And the problem isn't just with gas stations - it can happen anywhere you use your card.

[Toucano]

13. Actually, that's not true.

They system very much knows what kind of card you're using.

It even knows if it's a "rewards card". Visa recently increased the rate merchants pay to authorize cards that have rewards tied to them. Someone's got to pay for those miles, cash rebates and such and it's not going to be the bank.

It breaks cards down into five or six categories that you can't discern by looking at the card. The system, however, knows.

[baldguy]

15. I used to work in the credit card dept of a bank.

All the rewards points and miles, the calulation of rates charged to the merchant, and all that is done on the back end - not when you swipe your card through the card reader. It's entirely seperate to the charge authorization process. There's no way for the merchant to know just by looking at the card number how much can be run on a particular card, or whether its a credit or debit card.

[Toucano]

34. Technology is always changing.

What was true last year or the year before, doesn't stay true.

I didn't intend to suggest a merchant could tell what a card limit or availability is by looking at the card. Pardon me if I said something that suggested that.

The ABA's standards for encoding magstripes on bank cards includes information on the type of card.

"Track 2 is encoded at 75 bits per inch, and uses a 4-bit coding of the ten digits. Three of the remaining characters are reserved as
delimiters, two are reserved for device control, and one is left unde-
fined. In practice, the device control characters are never used, ei-
ther. Track 2 can hold up to 40 characters, including an LRC. Data
encoded on track 2 include PAN, country code (optional), expiration
date, and discretionary data. In practice, the country code is hardly
ever used by United States issuers. Later revisions of this standard added a qualification code that defines the type of the card (debit,credit, etc.) and limitations on its use. AMEX includes an issue date in the discretionary data."

http://tinyurl.com/a8p4h

Now I agree that the terminal at the pump doesn't know what type of card is being used (provided the card holder hasn't selected DEBIT, which puts the transaction on a different network) but the host the terminal connects to ABSOLUTELY can distinguish between credit and debit cards. Since the host determines whether a hold is placed on the account as part of the transaction, what the host knows is more relevent than what the merchant knows.

Furthermore, Mastercard argued that debit cards are distinguishable by the merchant in their anti-trust suit:

http://www.mastercardintl.com/newsroom/merch_statements_14nov2002.html
"Because they have no valid antitrust claim, the plaintiffs' strategy relies on distorting the case record. Plaintiffs claim, for example, that MasterCard and Visa have tried to prevent merchants from distinguishing between credit cards and debit cards, and they have therefore been unable to prompt consumers to use their PIN when paying with a debit card. In reality, during the same week that Wal-Mart authorized their counsel to file a complaint making that allegation, Wal-Mart was training its cashiers, instructing them that they can readily distinguish credit from debit, and prompt for PIN. Continuing its well-known history of discovery abuses in litigation, Wal-Mart initially claimed to have ‘lost' this video, as part of its blatant effort to conceal evidence. Likewise, an internal Payless document confirms that debit cards and credit cards are easy for merchants to distinguish, and testimony of a Sears executive admits that these cards are ‘readily distinguishable.'"

And Visa requires banks to include language on the face of the card that identifies it as a debit or "check" card. http://www.visadps.com/prod-checkcard.html

"Card Design Considerations
Requirements

* The three-band Visa Flag, Dove hologram, and "V" symbol
* The word "DEBIT" in 11-point type face centered above the hologram
* BIN, account number, cardholder name, and expiration date
* Signature panel and magnetic stripe"

Those design considerations are subject to approval by Visa and they have been know to be flexible, however. For example, the may permit the words "check card" to substitute for "DEBIT"



The best way for card users to prevent a pump from placing a "hold" amount on their account is to select DEBIT first and enter their pin. This makes the pump operate on the ATM network, the transaction happens live in real-time without a batch or settlement having to occur to release the hold.

[Padraig18]

10. The problem is your bank, not the gas station.

If your bank guarantees payment to innocent vendors, then there is no 'hold' on your card. Let's place the blame where it properly belongs.

[MadHound]

11. Better yet, pay with cash at the gas station

Latest scam is for credit card forgers to attach a reader on the pump, and skim the credit card numbers off, encoding them onto fake cards, and charge, charge, charge!<http://www.waff.com/Global/story.asp?S=1618821>

Just cut up the damn card, and go to a cash only basis. All you're doing with a credit card is feeding the beast, and opening yourself up to be a fraud victim. I've never had a card, and I've never had a problem. We all bitch about the unholy influence that banks and credit card companies have over our government, well gee, let's stop feeding the beast!

Cut up your cards, you'll never go back.

[patricia92243]

12. I did not know this. Thanks for posting. Somthing else-I have a Debit

card that I use exclusevely for anything I get off the web. I keep only a VERY small amount of money in there so if it got stolen or whatever I would only be out of a small amount of cash.

[dddem]

14. I also use a debit card to shop,

but I only put a little money in the account. Something that happened to me at the gas station though - I go to a full serve station, and they process the transaction inside, as a credit card. After I signed the slip, but before I drove away, I checked the receipt (ashamedly, something I usually don't do.) and found that I was charged $10.00 more than the gas I got. I went into the station, and the kid was all apologies about how the machine screws up sometimes, and did I want him to fix it, or did I just want the cash back. I took the $10, played mickey the dunce about how this kid tried to steal from me, and have never paid for gas with anything but cash since.

[supernova]

16. I use a Costco Cash card

I pay for the cash card at the register when checking out. I decide how much money to put on it. And the pump only ever takes the EXACT amout of the gas off the card each time.

[midwestblue2]

17. But in most places

Most gas stations in the midwest only put through a $1 authorization. This is to ensure that the card is an open account. In bigger cities, the practice has started to put through a $50 authorization. I work in the industry and have never seen a $100 authorization for gas. I'm in the midwest, so that doesn't mean it isn't happening elsewhere.

A big trick of the financial institutions is to kick in their over-draft protection when you have an authorization on hold. The financial institution will allow you to go into the negative for a small fee that is anywhere from $25 to a $35 fee. So even if you only go into the hole for $5, you will have a fee of $25 added on to it. Granted, people should monitor their own accounts...there are far too many people who do not take the time to balance their checkbooks, people who have no idea what they have or don't have. And FIs prey upon these people's ignorance.

The more damning indictment to the use of debit/credit cards is the new software that is allowing the marketing departments of FIs to not just see where you are making your purchases, but what you are purchasing.

This software is still in the early stages, but is developing quickly (with the cooperation of merchants who want the info, as well). What I foresee is this information, combined with credit report scores being used to determine who gets their credit card rates raised...Just imagine, a pricing strategy that would incorporate the fact that a person buys cigarettes with their credit card. Obviously this person is a smoker who is proned to major health issues, so we have increase their APR because they are a risking borrower.

You may laugh at this. I made a joke about this in a meeting the other day at work (for now, I do work in this industry)and everyone laughed, but very nervously...Cause in this industry nothing is beyond the most abusrd thing you can imagine.

[newyawker99]

35. Hi midwestblue2!!

Welcome to DU!! :toast:

[KansDem]

18. I learned the hard way...

Several years ago my family and I went on a short vacation to Colorado. We enjoyed the trip but were somewhat limited with our finances. My wife had planned the trip out to the nearest dollar, budgeting what we could spend for each day. We used the "Entertainment Book" to save on motel/hotel and food expenses.

We were returning to Kansas when I stopped off just this side of the Kansas/Colorado state line to fill up. I had used a credit card for some gas purchases along the way so as to save cash for incidental expenses. Well, I went to pay for the tank of gas and my card was rejected! I thought this odd since I had kept careful track of what my credit limit was and how much I had charged. So there we were: in western Kansas with a long drive home to eastern Kansas and no money. Luckily, the gas station manager permitted us to drive to the local grocery store where we cashed a postal money order that my wife had taken out before the trip to pay an unrelated bill. Lucky for us, she didn't pay the bill before we left and just happened to have it in her purse during the trip. Fortunately, the store accepted it and we were able to pay for the gas and continue home.

When I arrived home, I called my credit card company and discovered that each time I bought gas, a $50 to $100 hold was put on my card, so when I thought I still had a few hundred dollars credit, I actually had nothing.

That was the last time I bought gas with a credit card...

[Mrs_Beastman]

19. Usually a gas pump pre -auth is $1

the gas station usually just check to see if it is a valid card...are you sure the $100.00 hold isn't from a deposit you made of a check that hasn't become available?

[elehhhhna]

33. Houston here & that's what we have -- 1 dollar hold.

[Zynx]

20. This sounds like paranoia or an urban legend

[blondeatlast]

23. Gotta love Snopes--it's not untrue, but not nearly as nasty as it sounds,

either:

This problem is solved by "reserving" a block of credit. When I make my hotel room reservation, the hotel puts through an authorization hold that grabs and reserves a $200 chunk of credit to ensure that the room charge will eventually go through. They aren't actually charging $200 to my card; they're temporarily holding a portion of my credit line so that I can't spend more than $100 somewhere else in the meanwhile, thereby guaranteeing that their later $200 charge will go through without running afoul of my credit limit. Once the transaction is completed (or cancelled, or allowed to expire), the authorization hold is reversed.

Lots more at:

http://www.snopes.com/inboxer/scams/gascharge.asp

[SoCalDem]

27. Banks do this too.. I used to work in a travel agency owned by a bank

and when we got a check, we would just call the issuing bank, and they would put a hold on the account..but only for the amount of "our" check..Banks do not like bounced checks written to them:)

[Zorra]

21. Never use a credit card

.....to pay for anything.

Please don't support these evil companies that are hellbent on placing a significant number of Americans into positions of indentured servitude.

[deadcenter]

25. better idea

don't use a credit card to buy anything you can't pay for at the end of the month.

deadcenter

[Zorra]

28. I disagree. That idea sucks.

Credit cards cause a great deal of human misery, and are partly responsible for a general loss of liberty in our society.

The idea is to drive credit card companies out of business.

[SoCalDem]

26. Hotels and car rental places do this too..and for a LOT more

could ruin a vacation ...

[blondeatlast]

29. Snopes it--it isn't untrue, BUT...

Keep in mind they are dealing with a transient customer in many cases and it begins to make sense--and it isn't nearly as bad as it's portrayed.

http://www.snopes.com/inboxer/scams/gascharge.asp

[amazona]

30. never use debit card ANYWHERE you can use credit card

People have been sold a bill of goods with the debit card. If an error in billing is made, you're out the money directly from your checking account until such time as the error has fixed. They have no motivation to clean up their mess, so it can take months.

With a credit card, I see a mistake on the bill, I just don't pay the part of the bill that is wrong. Again it can take the credit card company months to fix their bill -- once it took a year -- but I'm not out any money in the meantime. And that bill that took a year to fix? In the end, in addition to removing all charges, fees, etc. from that card, the bank sent me an extra $110 for an apology. Not sure why but I'll take it. Can your debit card do that?

The only reason to use debit card is in situations where you have no affordable choice to get money -- mostly getting foreign currency from ATMs in foreign countries.

Almost every other situation using debit card puts you in a ridiculous situation of being vulnerable to a financial mess each time an error is made on your bill. I've had thousands of dollars of incorrect charges removed from my bills over the years. With credit card, it causes a minor inconvenience of switching to another card and writing some letters until the mistake is fixed. If the same mistakes had been on debit card, I would have been out serious money while getting these errors fixed -- I can only imagine the stress. I shudder to think how many debit card users have had their finances screwed up because they used debit instead of a credit card. And, of course, with the credit card you do get the rebates. Can't see paying by debit so you can end up paying 5 percent (10 percent during special promotions) more than the other guy for a worse service.

We need better financial education in this country. The debit card preys on the naive consumer who has an unreasonable fear of credit.

The conservation movement is a breeding ground of communists
and other subversives. We intend to clean them out,
even if it means rounding up every birdwatcher in the country.
--John Mitchell, US Attorney General 1969-72

[tjdee]

31. They took $27 bucks once for $5 gas.

I was PISSED.

They didn't ask my permission, they just asked 'debit or credit'. Now I always say credit shopping anywhere, and only pay cash for gas.

[uncle ray]

32. cash cash cash!

i got used to using cash for damn near EVERYTHING a few years ago. all these new laws etc. don't much bother me anymore, the new bankruptcy law, the thing they did a few months ago, making checks come out of your account much quicker, eliminating the "float" some of us would use. i take spending money out of the bank, $100 to 300 at a time, i tell ya, it sure helps you keep track of where your $$ goes and how fast! and you learn REAL FAST what your real spending limits are. it gets a lot easier to properly budget money when not having it means not eating for two days before you get paid, as opposed to charging it and paying later, when the credit card using people do get paid later, they have that credit bill to pay. me? i get a relatively modest paycheck, with NOTHING to pay. no interest. no late fees. no problems. and to top it off, almost every month, i get to purchase a significant "luxury" item with the money that others would be paying for their credit. also the "stuff" i generally buy isn't walmart crap, it's old collectable stuff that holds it's value, a savings account of sorts.

i'm READY for the post-credit economy. are you?

[greatbubba]

36. 76, Shell, and Some of the Arab places charge only $1.00 dollar.

I know because I am guilty I own an SUV and sometimes I dont have enough money in my account till payday which is like a week a way...So I check my account and if I have $2.00 then I go to fillup with gas. 3 days later my bank pays the transaction and on payday the bank gets it's money.. NO I DONT GET NSF charges....MY BANK DOESN'T charge an annual fee nor NSF charges....

[CAMANY]

38. This is BS people!

"to ensure they get their money"

If you use a PIN number at the pump the money is IMMEDIATELY taken from your account. That very second. There is no "Oh gee maybe we won't get it".

If you were to use credit on a visa/MC check card you would STILL have that money placed on immediate hold in your account. They would still be guranteed the money. Period.

"holding" additional money would do not a damn thing - the money you spent is already gone the very second you used the card.