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Choosing an Account - Automated Teller Machines/debit Cards

Published by sam - 23/08/07 - 08:08:00 am

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Automated Teller Machines/debit Cards   

ATMS have both positive and negative attributes.  On the one hand, they offer a major convenience in the form of numerous locations (there are an estimated 68,000 ATMs nationwide) and 24-hour access to funds.  They also speed up routine banking transactions.  ATMs can frequently be used to get cash advances from your Visa or MasterCard accounts.  And with the rapid expansions of regional and national ATM networks, which allow a checking account holder of one bank to make withdrawals through the ATMs of another bank, more and more people now have access to hundreds or even thousands of these machines, depending on the network of which their bank is part.

But keep in mind that the machines limit your access to personal service.  Thus, it is again most important that you assess whether a bank places its emphasis on efficient ATMs or on people.

Another potential negative is that ATM’s and the estimated 152 million debit cards Americans use to work these machines are laying the groundwork for a society of paperless financial transactions.  Since 1981, some 200 banks, S&Ls, and credit unions in Lowa have been experimenting with so-called point of sale (POS) transactions.  Other banks around the nation – among them, Florida’s Barnett Banks and Bank of America in California—have also been exploring the POS business.  In a POS transaction, you present a store with your debit card when you make a purchase.  The card is run through a card-reader, you punch in your personal identification number, and funds are instantly transferred out of your account and into the stores account.

Some banks are also issuing other debit cards under the Visa electron Visa, and MasterCard names.  These look just like the Visa and MasterCard credit cards, they are as wide accepted by the more than 4 million merchants who accept  Visa and MasterCard credit cards, and they work the same way as the credit cards at the checkout (though they typically employ a paper-based charge imprinter at present).  In reality, however, these debit cards plastic, paperless checking accounts that do not extend credit.

Such technological capabilities are indeed fascinating, but there is a major disadvantage in POS transactions for the consumer.  The so-called float, or the time for the money from a check. You’ve written actually to be withdrawn from your account, is eliminated.  So you cannot write a check at the supermarket today knowing you’ll deposit your pay tomorrow.

Furthermore, an estimated 1,300 debit cards are lost or stolen each day.  While your loss liability is limited to $50 if you notify the bank within two days of discovering the loss of theft of your debit card, a criminal with access to your checking account can cause much more havoc than one who steals your credit card.  With the credit card, you simply stop using it until a new one is issued.  What do you do when your checking account is deactivated for several days while the bank straightness out the situation?

To protect yourself, keep your debit care in safe place; never divulge your personal identification number (PIN) to anyone; don’t write your PIN on the card or on a piece of paper kept in your wallet; and don’t use your Social Security number, birth date, address, phone number, or other obvious number as a PIN, since an astute criminal might find those numbers written on other ID kept in your wallet.

Of course, one does not have to use—or even have—a debit card.  However, banks are already providing incentives for POS and ATM usage by imposing no charge for those transactions but a per check charge of 25 to 50 cents, and additional charges for human teller transactions in some places around the country (Memphis, for example).
 To further reduce the use of paper, some bankers are also trying to convince depositors that they do not need their canceled checks returned to them with the monthly statement.  “Truncation,” as this is called, is a cost move by the banks—though banks call it “check safekeeping.” In fact, the checks are not kept safely anywhere.  They are destroyed after being microfilmed.

To force consumers to accept truncation, some banks impose penalty charges if you would want your checks returned; there are no extra charges if you agree to truncate.  Consumer Reports advises most consumers to continue demanding their canceled checks.  Canceled checks are good legal record of transactions, and some banks are charging up to several dollars to produce photocopies of truncated checks.  Having all your cancelled checks in a safe place at home makes for every convenient verification of payments you have made.

Intangibles  
Last on the list of factors to consider – but nevertheless important to different people in varying degrees – are intangibles are difficult to measure.  Does your bank frequently have long lines? Some days of the month—such as the first and the fifteenth, Fridays, and the days before and after a holiday – are high traffic times.   Banks routinely monitor how many people come into the bank day by day and hour by hour for staffing purposes; the best of them bring in extra personnel to handle increased-volume days.

There are other important intangibles.  Are the tellers friendly?  (The job of bank teller is often a high-stress, relatively low-paying position).  How helpful are the bank officers? Are errors corrected quickly and to your satisfaction? How often are the ATMs out of service.

The best way to assess how well a bank provides these intangible benefits is to ask friends, coworkers, and relatives who use the bank you are considering.  If their experience with the bank has frequently been frustrating or annoying, chances are yours will be too.

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