The Problem
The debit cards should be such a convience. An electronic hookup to your checking account is a great idea, and for most people, I think it would make their accounts easier to manage. In my case, I can’t use a debit card for one simple reason, Because it ends up costing me a bunch of money. I end up getting multpile, and sometimes gigantic, overdraft fees, which start a cycle of me not having enough money to pay my bills, and the cycle keeps taking money away from me in the form of fees until I can recover. The amount of money I have spent on bank fees in the past year alone is outrageous, but I can’t really blame anyone but myself.

There are a couple of reasons I keep getting overdrafts. One is that I lose track of the amount of money I’ve spent out of the checking account. I usually keep my receipts pretty well, and I transfer those receipts into a spreadsheet I use to track my checking account. The problem is sometimes I get lax about transferring the info over to the spreadsheet, and it seems like when my money is low, I’m more likely to not open up my spreadsheet. I’m sure I do this because I don’t want to know how little money I have, but of course, this causes me to spend more money that I have, causing overdrafts.

Another main reason I keep getting overdrafts is that I don’t have an emergency fund. What I mean is that I get into situations where I really need some money, and I’ll try to float a check. Sometimes, this method works out okay, but more often than not, the check gets cashed before I am able to put enough money in the bank to cover it, which means I start getting overdrafts. If I had an emergency fund, I could use that in these cases where I don’t have enough money right away, and I need to “float” some money in my account.

The Danger of the Debit Card
So what does all this have to do with the Debit Card? My biggest problem is that once my account gets really low, and an overdraft is going to happen, all of the little debit card transactions kill my balance. I was using the debit card to buy lunch for about $5, or grab a video online for $1.99, or buy a book for $10, basically all the time. This doesn’t sound bad until you see your account in the negative before these debits clear through the bank. At that point, every single one of these transactions gets an overdraft fee attached to it, which changes that book from $10 to $40. Those three items above cost about $17 together, but if they get caught in the overdraft, they now cost me $107!! Where I could have gotten $20 out of the ATM to cover all three, and the ATM would have posted sooner, so maybe I would have known I was down on money. Instead, I’m out over $100, and I don’t make enough money where an unexpected $100 doesn’t impact my lifestyle and bill paying.

I know I should have overdraft protection, if nothing else, to help me avoid all of this money I was wasting. Of course, I should have a savings account with an emergency fund loaded in there. The fact is that I don’t (yet, at least). I’m working on it, but in my past, I never really had a savings account. I lived paycheck to paycheck. I tried using a savings account once, but all I did was drain my savings account before overdrafts started becoming a problem again. Also, my credit sucks, so I couldn’t get a credit card to attach to my account as overdraft protection either.

The Fix
The steps I’m going to take to try to counteract my destruction via debit card is to, very simply, stay away from the debit card as much as I can. I’ve shown that I do not have enough discipline to handle the debit card wisely or effectively, so I need to take measures to ensure that I do not abuse the debit card. Unfortunately, I can’t get rid of the debit card altogether, because I need it for some bills online that I have automated and I use it to pay at the pump (my gas gauge is broken, so I always fill up to the brim…another story). As much as I’d like to, I can’t quit the debit card cold turkey, but I’ve decided on a few measures to help me avoid overdrafts.

The one major change I made was to get an ATM card for my checking account that is not a debit card, which means I have both an ATM card and a debit card connected to my checking account at my bank. I actually didn’t know this was even possible until I just happened to ask one of the girls at the bank. What this allows me to do is keep the debit card out of my wallet. I’m now keeping the debit card at home for the most part, or in my car, when it’s time to fill up for gas. Instead, I keep the ATM card in my wallet, and if I need to buy something, I just have to hit the ATM first, which also lets me see my current available balance as well. The main benefit is that I don’t use my debit card and chance multiple overdrafts.

The main thing I have to remember is that I recognize I don’t have the discipline to responsibly use a debit card, and that’s why I must do without one. People may say the debit card is a good tool and I just need to change how I use it. My response is my history shows me I cannot be trusted to successfully make that change. Instead, I have to change my habit of using the debit card at all, and I’ve started by removing the offending card from my wallet. I’ll have to see how the change goes, but at least I’m doing something. I’m at least taking that first step.

Keep Steppin!

Filed under: budget, money