Play your cards right

YOU GOTTA KNOW WHEN THEY’LL HOLD ‘EM
When a debit card is used to initiate a purchase whose final bill can’t be determined immediately, a hold on a certain amount of money often gets applied. For example, you swipe your card to refuel, and the system blocks out a few hundred dollars more than you pump.

“That hold will actually remain in effect until the transaction is completed and processed, which could be 48 hours,” says Greg McBride of Bankrate.com. “In the meantime, the presence of that hold could cause other transactions not to clear.”

Americans’ love affair with credit cards has a long history. Now a younger piece of fantastic plastic is working its way into wallets: the debit card. A study by banking groups showed that debit card use grew from 21 percent of consumer purchases in 1999 to 31 percent four years later. Over-the-road owner-operators looking for low-cash, high-security financial dealings are among the users. A spinoff of the debit card is the stored-value or prepaid card. While a debit card is tied to a live account, usually checking, a stored-value card is the equivalent of a retail-store gift card: just money credited to a card.

Interstate Connections, a vendor of cell and satellite radio services at 100 truck stops, recently announced it would sell the NetSpend All-Access Visa Prepaid Card. You also can find stored-value and debit cards from longtime industry providers such as Comdata, T-Chek Systems and Flying J’s Transportation Alliance Bank. Some are designed for owner-operators with one or more trucks. Some can receive settlements as deposits.

Paul Thompson, an owner-operator consultant with American Truck Business Services, cites one advantage of a stored-value card over a debit card. “It’s kind of like the cash envelope method a lot of families use for budgeting,” he says. “A lot of guys get out with a debit card and spend the groceries without realizing it. A stored-value card can curtail that.”

Determining which type of card carries fees that nibble at you the worst can be tricky, says Greg McBride, senior analyst for Bankrate.com, an online financial information service. With prepaid cards, “There can be an activation fee. There can be an inactivity fee. There can be a fee if you close out the card and want the remaining balance in cash.” For instance, a Green Dot prepaid card application I found at a convenience store requires $9.95 for activation and $4.95 per month, not to mention possible dual ATM fees.

However, prepaid cards generally have no transaction fee; this isn’t always so with debit cards. “It tends to be applied only on transactions where you enter a PIN, rather than when you sign,” McBride says. “The reason for that is that banks, the issuers of debit cards, get a bigger cut on a signature-based debit transaction because it is routed through the credit-card network.”

As with any financial service, check out the terms of any card you use. Find the right balance of low fees, convenience, and suitability to your need for security and your level of financial self-discipline.

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