checking

Check card problems to watch for

Per-day limit on transactions

Does your bank have a limit on the amount of money you can debit per day or the number of transactions?

Most banks set check card daily spending limits based on an individual's account, so you may have to call the bank to find out what your limit is. Citibank posts its daily limits on its Web site: For a Gold account, it's $2,000; for Everything accounts, $2,000; all others, $1,000. Bank of America lets each customer set his or her own daily limit.

Most credit unions have the daily spending limit posted clearly on their Web sites and the limits generally range from $1,000 to $3,000.

PIN versus signature

As Bankrate's Check Card Survey shows, few banks charge a transaction fee for using a check card. For merchants, it's a different story: They pay a higher fee, called an interchange fee, when buyers sign for purchases than when they use a PIN.

The card issuers want consumers to sign for their purchases rather than using a PIN, even though PINs are more secure. To encourage signature use, banks offer reward programs (which are not as generous as credit card rewards programs), most of which award points only for signature purchases.

"Signature-based debit transactions are less likely to incur fees and may offer rewards such as cash back, depending on your card," says McBride. "Given the choice, a signature, or pressing 'credit,' is the better way to go."

While merchants pay a higher fee to a bank for signature transactions, it may be offset by the fact that the average signature check card transaction is $42, while the average PIN transaction is $38, according to the Federal Reserve.

The difference to consumers is whether they sign the sales slip or type in a PIN when they use a check card. What's really going on is the way the transaction is processed. PIN transactions take money from your account via the electronic fund transfer, or EFT, networks, such as NYCE, Pulse, Interlink or Star. Signature purchases go through the Discover, Visa or MasterCard networks, just like a credit card.

With a PIN transaction, the money is immediately deducted from the checking account. With a signature transaction, it may take two to three days for the transaction to be processed.

In the past, most Internet or phone purchases with debit cards were signature purchases, and PIN purchases were made in person. However, recently the EFT networks have introduced PIN-less debit transactions for telephone and Internet shopping. Visa's "Verified by Visa" program allows cardholders to sign up for a PIN for shopping online, adding another layer of protection.

"If you take a look at where most debit cards have been lost, they've been lost in physical stores," says Sloane. "The risk is equal between credit and debit on the Internet, other than the time it takes to restore the money to your account. But loss is more likely to happen in a physical store."

When consumers know the possible problems they could encounter with check cards, they'll be able to more effectively manage their money, which is usually their goal with check card use.

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