Gary North

I am a big fan of debit cards. But there is a problem with debit cards.

An overdraft charge of $30 to $40 is common when a person spends money not in his debit card account. This is a big money-maker for banks. Something in the range of 50% of all overdraft charges come from point-of-sale debit card purchases. This is over $9 billion a year.

It's annoying to get charged $30 for an overdraft of $5, but it's not a disaster for most people. But for people with poor spending habits, it is more common.

It's wise to go to the bank that issued the card and fill out a form that tells the bank's computer to refuse to honor any transaction that exceeds the money in the account. You cannot afford a mistake here.

If you insist on protection, have the card debit your savings account, if you have one. But you will still pay the $30 fee, per transaction, even if the transactions average $5 each.

Don't use an overdraft that creates a line of credit. That defeats the purpose of the debit card.

If the bank doesn't offer this savings account-only option, either find a new bank or else monitor the money in the debit account. Don't assume that just because the charge is accepted you have sufficient funds in the account.