Who wants to return from vacation to a stack of credit-card bills? It’s sort of like asking who wants to stay one more night in a motel room with more than a hint of mildew.
Oh, sure, it’s convenient. But plenty of people are packing their debit cards, instead of credit cards, as the plastic of choice just because they want to avoid digging themselves deeper into debt.
Consumers need to watch out for fast curves in the road, though, when it comes to using a debit card on vacation.
Unexpected hold: Some hotels could put a lock on your money longer than you’d imagine if you pay with a debit card. The trouble is you don’t have access to that amount of money in your checking account when a hold is in place. And you might trigger overdraft charges.
Say you were checking into the Chicago Marriott Downtown Magnificent Mile. The debit card policy there is a hold of $50, plus the room and tax, for each night you’d stay. Some hotels will hold 115 percent or 120 percent of the room charge plus tax on a debit card. Lydia Westbrook, research director for the American Hotel & Lodging Association, noted that the hold might be for seven days or longer.
The Federal Trade Commission notes on its website that how long your money is blocked could depend on how you pay the bill, too. It’s possible the block could be lifted in a few days, the FTC noted, if the consumer pays the bill with the same card used at check-in.
“However, if you pay your bill with a different card, or with cash or a check, the company that issued the card you used at check-in might hold the block for up to 15 days after you’ve checked out,” the FTC noted.
Gerri Detweiler, director of consumer education for Credit.com, said people who are driving across country and stopping in a few hotels along the way could accumulate a fair amount of holds on their money.
Depending on the balance in your account, blocking could lead to a string of $35 overdraft charges for insufficient funds.
Jean Ann Fox, director of financial services for the Consumer Federation of America, said if you’ve opted in to pay overdraft fees triggered by your debit card, you may face overdraft fees for later purchases or withdrawals if your account is blocked. It depends on how much extra money you have in the account.
She noted that the blocking problems can occur when using a debit card to buy gas. At the pump, it’s possible to have $50 or more blocked for a time even if you only buy $25 worth of gas, for example. Fox recommends paying inside the station and using the PIN so you’re charged for the gas you buy and no extra money is held.
A Federal Reserve ruling requires banks and credit unions to obtain customer consent through an opt-in policy before charging an overdraft fee to let a debit-card transaction go through when the account is short. If you don’t opt in to pay overdraft fees on debit card point-of-sale and ATM transactions, the transaction is denied and there is no fee.
Theft: A crook could create more headaches if a debit card is your only source of cash.
Experts say if you’re going to take a debit card on vacation, change the red flag alerts to a lower amount to deal with the possibility of fraud. Ken Lin, CEO at CreditKarma.com, said in general it’s better to travel with a credit card, not a debit card.
Access to cash: If you have a debit card with a major bank, you could withdraw money from ATMs and face reduced fees.
Bank of America, for example, is a member of the Global ATM Alliance, a group of financial institutions, meaning customers who use a debit or ATM card at member ATMs in select countries would not pay the international ATM fee of $5.
Also, watch out for fake ATMs. Crooks can install card readers to capture account information to make it easier to steal from you later, warns CreditKarma.com. Stick with ATMs at a branch to be safer and cover your PIN number from prying eyes.