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No doubt about it, debit card usage is a big part of the new normal on Main Street these days as consumers try to manage credit card debt.

According to the TSYS & Mercator Advisory Group Debit Survey 2011, debit is now the preferred payment type in most point-of-sale locations, beating cash, credit cards and checks.

But that doesn’t mean you should use debit cards all the time. In fact, there are some places and times that using a debit card is actually a lousy proposition.

For example, using a debit card online can work against you. If you have a problem with the purchase or your debit card number is stolen, it’s a huge hassle to get the money restored to your account and making your card number safe and secure again. In the online world, credit cards are usually a better bet.

Here are some other instances where debit card usage is a bad idea:

Rental or security deposits. If you have to put money down to rent a car or heavy duty home improvement equipment, try not to use a debit card. Why? Because the business will actually take the money out of your account in the form of a security deposit. You’ll get the cash back when you return the car or equipment. But with a credit card, the money is just “frozen” but not actually charged and you won’t ever notice it’s gone.

Restaurants and bars. There are way too many prying eyes around a dining establishment to trust using your debit card. Apart from the risk of having your card stolen, restaurants are one of those rare places where someone actually walks away with your card and you don’t see them for a few minutes. Much better to use cash when dining out.

Regular payments. Businesses love to get their sticky little fingers on your debit card number so they can extract dues straight from your bank account on a regular basis. Whether it’s a gym or your insurance company, you’re better off using a credit card. That’s because if there’s a dispute, the business won’t take the cash right out of your checking account if they don’t have your debit card number.

Wi-Fi hot spots. Never use your debit card for an online purchase while at a coffee shop or other business that offers free Wi-Fi access. Many of those businesses have unsecured wireless connections, so it’s much easier for hackers and scammers to log on and steal your data.

Any retail outlet where you choose the “credit” option. Debit cards allow you to choose between a debit (having cash taken straight out of your account) and a credit transaction (where the money will be taken out but it could be a few days later). For one, credit purchases cost the retailer more cash in swipe fees, so you could be hurting a small business owner. But the real problem is the delay when choosing credit – you may forget the purchase and not account for the money. That can lead to an overdraft situation and the onerous fees that go with them.

Debit cards are great financial tools, and it’s easier carrying a card that a wad of cash. But debit cards shouldn’t be used all the time – and the situations listed above should be at the top of your list of “no debit” zones in the future.
http://www.mainstreet.com/article/moneyinvesting/credit/debt/5-places-
never-use-your-debit-card?cm_ven=outbrain&psv=outbrainselectedarticle&obref=obnetwork never knew that last part about retailers, and will be choosing "credit" from now on when I have the choice! That's a slimy way to ding the retailer, in my opinion.

And, on that last subject:

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In 2010, Congress made it a priority to put “swipe fee” language into the Financial Reform Act, but the card industry's lobbying efforts to delay such reform could cost retailers up to $1 billion per month.

Swipe fees, also known as bank interchange fees, are the costs retailers incur by accepting debit cards from customers. Big card companies like MasterCard (Stock Quote: MA) and Visa (Stock Quote: V) and the banks that offer the cards collect those swipe fees from retailers on every debit card transaction. The fees average about 2% of the total cost of the transaction, according to the National Association of Convenience Stores.

The Federal Reserve's proposal in December would cap debit card swipe fees at no more than 12 cents per transaction.

The language on swipe fees was originally inserted into the Dodd-Frank financial reform bill that passed last June. The so-called “Durbin Amendment” directed the Federal Reserve to make sure debit card swipe fees were reasonable and proportional to the operating costs incurred by financial services companies. The bill was aimed at large banks only – financial institutions with under $10 billion in assets were exempt.

Now, some retail industry groups worry that card issuers' lobbying efforts may result in Congress delaying the implementation of swipe fee limits, which they argue could cost retailers over $1 billion per month. Lobbying groups are purportedly targeting the U.S. House Financial Services Committee’s subcommittee on financial institutions, which is meeting this week to review debit card swipe fee regulations. The committee could hold off on the swipe fee reforms, or even produce new legislation that could delay reform for up to two years, the NRF claims.

“Congress recognized last year that the credit card companies and big banks have been extracting monopoly-like fees from merchants and their customers for far too long,” says Mallory Duncan, general counsel for the National Retail Federation. “Now that reform is about to go into effect, the card industry is asking for a do-over they don’t deserve. Every month they can push back reform is another billion dollars taken out of consumers’ pockets. We would rather use that savings to cut prices, provide more retail workers with health insurance or put more Americans to work.”

A two-year delay would really hurt retailers, the NRF says. It estimates that the proposed cap on swipe fees would reduce them by about 70% - approximately $1.2 billion a month, meaning a two-year delay could ultimately cost retailers about $30 billion.

The Federal Reserve proposal is expected to wind its way through the approval process by this summer. The U.S. House subcommittee may use that time to table reform until the final Federal Reserve rules are ratified.

In the meantime, expect more jockeying for position by card company lobbyists and groups like the National Retail Federation. With $30 billion potentially on the table, the elbows should be razor sharp. http://www.mainstreet.com/article/moneyinvesting/credit/debt/swipe-fee
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Knowing all that guarantees I won't choose "debit" at a retailer; the last thing I want to do is ANYTHING that feeds the hungry maws that are banks!