Do You Have Swipe-itis

Do you use your check card/debit card to make all of your purchases? Have you stopped carrying cash? Do you feel lost without your debit card? You are not alone. There are over 520 million debit cards in use in the United States. Most of them are Visa and MasterCard debit cards.

It can be difficult to resist the temptation of the instant gratification culture of America. Advertisers make it easy for consumers to get everything instantly by creating online shopping, instant cereal, instant coffee, instant meals, instant messaging, and debit card purchases at most stores and businesses. Most Americans who have a debit card buy an item immediately when they see it either in a store or online. This bad habit has caused many Americans to overdraw their account, pay overdraft fees, spend more money than they have, damage their relationship with their bank and may lower their credit score.

No matter what form of payment you use you have to keep track of your spending. You should track your spending weekly if you frequently use a check card. This will help to see where you are spending your money and will help you to recognize errors or identity theft quickly. When you see where you are spending your money it is easier to reduce spending and make better choices when making purchases.

There are advantages and disadvantages to using a check card. Some advantages of using a debit card: it is easier to obtain versus a credit card, can be used in place of checks, accepted everywhere, transactions can be made quicker and can be used to get cash from an ATM or retail store that offers cash-back during a purchase. The disadvantages of using a debit card are: you can spend more than you have in your account; you can incur overdraft fees and can become a victim of identity theft. Here a 9 ways to stop swipeitis:

1. Pay your bills first. Put a portion of any extra money left over in a savings account.
2. Alternate payment. Use other forms of payments such as cash when making a purchase.
3. Get a receipt. Get a receipt each time you make a purchase and keep it.
4. Track spending. Take all of your receipts from your debit card purchases and put them in an envelope. At the end of each week add up the receipts to see how much you spent. Use pen and paper, an Excel spreadsheet or Mint.com to enter the data. You can import bank account transactions to your Mint.com account to simplify the process of tracking your spending.
5. Wait. Wait a few days before making a purchase that is more than $100. Go back to the store to see if you still want the item. If you still want the item, comparison shop to see which store offers the best price.
6. Retail therapy. Avoid shopping when you are emotional. This will prevent you from spending more than you have or buying unnecessary items.
7. Create a budget. Create a budget to track your spending daily or weekly. Set aside a specific amount for extra things you want. One reach that amount don’t spend anymore.
8. Leave at home. Leave your debit card at home unless you know you will make a purchase. This helps to reduce the temptation to make an unnecessary purchase.
9. Get cash. Go to the bank and take out the amount of cash you need for the week. Once you spend that amount don’t get out any more money or use your debit card unless it is an emergency.

Decoupled Debit Cards

Decoupled debit cards are where one institution issues a debit card that can be linked to any bank account and used for purchases and ATM withdrawals just like debit card consumers get from their bank when they open a checking account. The company pays a fees plus any interchange income.

Pros
1. Can charge rewards to combat the decoupled credit card.

2. Can get features such as free checking, free cards and transaction payout (reward), go online to view cash rewards accruals.

3. Can earn points on debit card purchases for having additional bank products such as money market accounts, CDs, loans, lines of credit, etc.

4. Combines the ACH industry and the payment networks such as Visa, NYCE, etc.

5. The intermediate service provider can capture the interchange income from the card transaction which would previously go to the consumer's financial institution.

6. It helps the consumer because they can use debit cards more frequently, reduce use of credit cards and no longer have to worry about fees associated with using a credit card.

Cons
1. It will hurt the financial institutions by eliminating income from banks that rely heavily on charges such as insufficient funds, etc.

2. Deprives credit unions of transaction fees but who will still have to pay ACH fees.

3. Targeted to 18 to 34 year olds who are generally are more internet savvy and may not be concerned about their relationship with their bank.

4. The transaction is performed and settled online over the branded payment networks between the merchant and the intermediate sevice provider but is settled with the consumer's financial institution using the offline ACH network.

5. Can increase risk to the consumer such as account validation which was not a risk in the previous transaction system.

Be cautious when using decoupled debit cards and be sure to pick the card that is right for you.