I wrote this post back in January explaining why I don’t use Mastercard/Visa branded debit cards for purchases.   At the time, I wrote that I felt this was nothing but a play by banks to extract enormous fees from consumers and this report pretty much proves the point.

Here’s an excerpt:

Our new research report, “Debit Card Danger,” includes an analysis of a large database of bank account information and a survey of the account holders. We find that these bank customers have more overdrafts caused by a debit card purchase than by a written check, that debit card overdrafts are more costly, and that survey respondents would avoid the fees if given the choice.

I’m working on some research for a future post about how watching TV commercials can help you avoid the biggest consumer traps to extract money from your wallet.  I’ll provide more detail later but have you noticed those cute and funny commercials featuring how easy it is to pay with a debit card.  Banks are spending hundreds of millions of dollars to convince you that you need to “join the club” and sign up for a debit card with a visa or mastercard logo.   You really have to stop and wonder why banks spend so much money to try to convince you that you’re missing out on something.

Well, the banks can afford the hundred million dollar TV campaign ads because they’re extracting BILLIONS from consumers via fees.  You’ll notice there aren’t any TV commercials advocating the use of a plain old ATM card (with 4 digit pin). Gee….I wonder why?

This is also a great reason to use proper holding accounts to avoid getting taken to the cleaners and to distribute your cash inflows properly!