Debit cards not without pitfalls

This column was published May 18, 2002.

Amid all the talk of easy credit in recent years, one fact often gets lost: Some people - whether they're frugal, wise, or just plain scared of it - don't want credit.

The trouble, as Juanita Wooten found out recently, is that credit can be amazingly hard to avoid, even if you stick to her simple strategy: no credit cards.

"I want to live on what I have. I haven't had a credit card in years," the Germantown woman says.

Wooten is too private to go into details. Suffice it to say that years ago, during a career as a SEPTA bus driver and later as an employment counselor, she had her problems with credit.

"I got in trouble, and that was the end of that," Wooten says. "Since that time, I pay cash or lay it away. "

What went wrong with her new plan? Oddly enough, it was a debit card .

You know, the kind of card people turn to if they have problem credit but still want to pay with plastic. A card that pays money straight out of a checking account. Above all, in Wooten's view, a card that can't sock you with interest.

The fine print

At least that's what Wooten thought - till she started getting charged for using money she didn't have, and finally read the fine print in her First Union account.

The problem, in a nutshell, is that Wooten and the bank had different ideas of how the card should work if, say, she had $25 in her account and presented it to pay for a $35 purchase.

That's happened at least five times this year, and Wooten thinks the transaction should have simply been denied. No money, no deal. No harm, no foul.

Instead, First Union paid the extra few dollars - and then charged her a $31 overdraft fee.

Each time it happened, Wooten complained. Each time, the fee was forgiven. Wooten is a great fan of First Union - she also loves its bank-by-phone system - but it's easy to see why, from this story alone. No one called her a deadbeat. Everyone tried to be helpful.

But, clearly, everyone's patience was wearing thin, Wooten's as well as the bank's.

Why not overdraft protection?

First Union did offer what might have been a solution - if you weren't Juanita Wooten: overdraft protection. If she'd just sign up, she'd owe a $5 charge any day the problem recurred, but the $31 fees would be history.

But Wooten got the debit card, remember, to avoid interest and fees. Paying a $5 fee for the privilege of spending someone else's money didn't sound like a solution to her. It sounded a lot like the problem she was trying to dodge: credit.

I'd like to say Wooten called me and I solved her problem, but that wouldn't be true. Nor did another person she called, Jerome Balter, a lawyer at the Public Interest Law Center of Philadelphia.

We both saw her point, though. Balter says that debit cards are appealing to people on limited incomes such as Wooten, who lives on disability. "A lot of people get sucked into credit," he says.

Wooten, thankfully, has finally been spewed back out - thanks to a First Union employee who finally recognized the obvious: The bank doesn't just pay any size overdraft - try writing a check for a cool million and see what happens. There's an undisclosed limit on everyone's account. Wooten's is now set where she wants it: at zero.

Before you call and ask for the same thing, though, bank spokeswoman Barbara Nate wants to remind you that the solution isn't for everyone.

Nate says many customers prefer knowing their bank will cover their overdrafts, even if they pay a fee. Sometimes they know that, by the end of the day, a deposit will clear to cover the shortfall.

"Customers find it very embarrassing to be declined when they've got a cart full of groceries," Nate says.

Nate recommends, too, that people treat a debit card like writing a check - that's why it's called the Visa CheckCard, she says. "The customer has a certain responsibility in managing their account. "

At least one useful change is coming at First Union. Come August, Nate says, customers will be able to set different overdraft limits for their debit cards and paper checks.

That way, if the debit card is refused at the checkout, you can at least pay the old-fashioned way: by floating a check.

Contact columnist Jeff Gelles at 215-854-2776 or