Debit Cards: Why Banks Push it in 2021

Why Banks Push Debit Cards:

FiLife’s Wall Street Journal reporters have launched a series of “Why Not …” blog posts that suggest services and practices that make sense to clients but are not offered by financial institutions.

I said one word: economy. If you think they should do something, but they don’t, think about the economy first. Probably not, because they get more because they don’t get.

Companies are driven by ROI – return on investment. They also compete with each other. Companies are not stupid. If something offers customer benefits and good ROI, you can rest assured that some companies will. If you don’t see this happening, it means there isn’t a good ROI or they are looking for something else with a better ROI.

Why not … Do you want a debit card other than a debit card? Ron Lieber asked why banks prefer to give their customers a debit card with the Visa or MasterCard logo (also called a credit card). To look). from a simple ATM card that can also be used as a debit card, but only with a PIN code.

In a follow-up report, Ron found that many large banks issue regular ATM cards, but that doesn’t make them the default option. Nor do they make it clear that customers have a choice. You have to ask specifically. This goes back to my previous opt-in or opt-out message: the power of the default option. The standard choice is designed to take advantage of the business offering options.

A Visa / MasterCard debit card can be used with or without a PIN. If you use it with a PIN, it’s called a PIN charge. If you use it without a PIN code, it’s called a “subscription fee”. If you lose your debit card, anyone who found it can use it on any signature store debit card. The cashier needs to verify the signature, but we all know it doesn’t work well.

A normal ATM card can only load the PIN. So it’s safer. If you lose it, no one can use it without a PIN. You would think banks prefer a more secure card, but that’s not the case. They look for a less secure card because they make more money if you pay for a subscription instead of a debit card.

According to an article on MSNBC, the bank can earn $ 1.48 on a $ 100 purchase if using subscription fees and $ 0.20 if using a PIN. Guess which button the banks want you to press? If you are a banker, what card do you want to send to your customers, a debit card that can be charged by subscription, or a regular electronic card that can only be used for debit card payments? No matches. Banks go to great lengths to provide their customers with a subscription instead of a safety pin.

– Wells Fargo offers a ~ 0.25% reward for using your control card. Only subscription fees are eligible. The cost of the pens is not important. In some areas, Wells Fargo charges $ 1 per month to use the PIN at least once. No registration fee will be charged.

The US bank charges customers in some states $ 0.25 for each debit card payment. Right here! This incentive will definitely discourage customers from hitting the debit button or repeating “debit”. No membership fees for membership fees.

Another reason banks insist on debit cards is that customers are more likely to generate overdrafts. When customers stop writing checks and switch to using debit cards, they also omit writing checks. It becomes increasingly difficult to control purchases. Before you know it, small purchases are in progress and you will not receive a scheduled check or withdrawal.

If you want to use a debit card instead of a credit card and are concerned about security, ask your bank for a regular electronic card. You don’t understand if you don’t ask. Avoid banks that charge debit card payments.

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