Do you get charged a fee for each debit card transaction?

If so, you might take that into account since it might offset the some of the interest that you'd gain.

Regarding the safety of debit cards, I personally wouldn't worry about it. But then, I'm in Canada where I believe the use of debit cards is much more widely accepted and used than in the States. I've never heard of anybody having any problems, or even worrying about having problems (other than Americans on this board).

Is it worth the risk of using debit cards for higher interest rate?

I've used my debit card for years with no problems. I think the paranoia about debit cards is unfounded.

I'd LOVE to get 4% on checking.

The one thing about debit cards is basically you have no recourse for anything you buy. Meaning, if you use a credit card and have trouble with the product you buy, you can disbute the charge, and possibly not have to pay for it. But with a debit card, it is like cash. You cannot disbute the charge.

Mariend,
Things one purchases with a debit card still come with receipts. If one needs to return something or has a dispute with the manufacturer, the receipt is all the proof needed.

There are some banks offering up to 6% on rewards checking accounts with similar requirements. Most of these banks are small local/regional banks, but the accounts are available to anyone, nationwide. Check the link below for a list.

Also, most utility companies will let you set up auto bill-payment using a debit/credit card. Given the number of utilities most homes have these days (phone, cable, gas, electric, water, garbage, wireless) you can easily take care a good number of the required monthly transactions without even thinking about it.

Here is a link that might be useful: List banks with high-yield reward checking accounts

Mary_c says:

"Things one purchases with a debit card still come with receipts. If one needs to return something or has a dispute with the manufacturer, the receipt is all the proof needed."

I wish that were true, but it's not. There is a federal law that says that if you order something with a credit card, and the vendor doesn't deliver, you don't have to pay the credit-card bill. As far as I know, this law does not apply to debit cards. Not only that, but the money is already gone.

It may be true that a receipt you get with a debit-card transaction is all you need to prove that the transaction took place, but that's not always enough to resolve a dispute with a vendor that turns out to be incompetent or dishonest.

I would not use a debit card for a large purchase. First of all, my account has a $300/day limit. Second, as already pointed out, I have more leverage paying with a credit card.

However, when I buy gas, food or such, I'm not likely to want to "return" the item; I know what I'm getting. And personally, I'm less likely to overspend when I'm using a debit card - it gives me a natural "brake" because I'm aware of my account balance.

For me, each has its place.

Thank you all for your comments.

If I use a debit card in place of cash to buy little items such as food and gas, it seems fine.

One thing I am worried is that if the card is stolen, my account could be wiped out. But if I can set a dayly limit, that would be fine.

The local bank offers a debit card with signature instead of PIN. I wonder if this makes the card more secure.

As someone who works at an institution offering an account like this...

As far as credit vs debit cards...the ability to dispute over quality of goods is much more narrow, but still exists to a degree. You will be out the $ while forms get filed, but that can sometimes be expedited depending on the size of your institution.

In terms of security, a PIN will always be more secure as long as you don't tell anyone what it is...I would opt for PIN only purchases before signature only...

If someone steals the card, Visa or Mastercard should cover you with zero liability(check with the institution) and PIN based transactions are usually covered after about $50 liability, although that can be waived in some circumstances.

Just as an aside, if you are planning on dumping every penny you have into this account, please DON'T! It seems like a great idea, but if you depend on the interest for income, keep in mind if something dramatic happens and you miss the requirements for a month, the bank will likely NOT be forgiving, no matter how much money you have. The system depends on a certain number of people missing the requirements and thus bringing down the average rate of return on the dollar (across all accounts) down to a lower level.

And for anyone interested, the bank can offer a account like this because:

*No statement saves $2-$3 a month
*Using online banking and having direct deposit means you're in the branch less asking how much money you have or depositing your paycheck
*Visa/Mastercard/and their PIN based network all give revenue to the bank when you make purchases with the card

Let me know if you have any other questions.

Jim

I can tell you from personal experience that they are great. If you need to return anything make sure you keep your recipts. If you did have to return something they credit it back to your account through the card #.

This was the only bad experience I've had. Howbeit it was one too many but the only one nun the less. About a month after I got the new acc. Someone called their phone company and was paying with their debit card. They told them their card #, the security # off the back of the card, and they knew their name right. Well somehow it got charged to my account. To the tune of $420. I flipped out, my husband flipped out. He went that day which was a Saturday and withdrew everything but $ to cover what we had out.

We went in Monday to the bank to figure out what was going on. They contacted the company and everything ended up getting worked out. I got my money back and the bank got me a new card and password. I didn't even do business with this company. They are baffeled. They still don't have any idea how this happened and this doesn't make me feel very secure so I keep my eye on them very carefully.

The only other complaint I had was I went to buy a new t.v. and it declined the card because it said that I was over my spending limit for the day. But the next day it worked. I guess the purchase price was too high. I just wrote a check for it. I had totally forgot that I could write checks.lol. I was going to complain to the bank and than I thought about it and I am really really glad that it does have a spending limit on it like that cause if that was someone else with my card I'd have a big mess on my hands.

With these cards you have three different ways of completing the transaction in person.

1. use it like a credit card and sign you signature.
2. pay using the pin # which I do find to be the most secure
3. if you pay at the pump. and even some fast food places don't make you sign or put in a pin #. This is kinda scary cause anyone could access your money if they have your card.

Check with the bank. It doesn't cost anything to use the card and you even get $20 worth of atm fees returned if you are charged any. My bank don't charge. I guess that is if you use another atm. I just use mine so I don't have to worry about it.

I went from paying $6 a mont to getting $ from them. Can't beat that plus if you don't meat their requirements you still get interest. So either way you get paid. Just don't rely on the intrest as income. Just tuck that away for a rainy day.

I hope this covers everything. If you have any questions please ask.
belle

Our local bank has this as well. I thought it had to be too good to be true, but alas its true.

4.75-6.00% on checking balance. This is accrued daily. The rate fluctuates based on the Fed's rate I believe. The rate is good up to 25K. All we have to do is use the debit card (We do this daily already), check our account online a couple times a month (We do this daily already anyways), and get electronic statements(We already do this as well). Was a no brainer for us. Any time we look at going over 25K just move it over to a money market account or invest it.