Is that a Dragon in your pocket, or are you just happy to see me?

I admit there are times when a particular subject riles me to the point that I just can't seem get it out of my system. I will prattle on about it with the ferocity of a calorically challenged southern belle squeezing into her girdle after a few too many Krispy Kremes. Those of you who are FORTUNATE enough to know me personally, can testify to the accuracy of that statement. Most of the time they listen politely all the while silently praying a big sinkhole will swallow them whole. Some even go so far as to untie my dog Daisy's leash knowing I'll have to run after her, which will effectively end the diatribe. Alas I will not be deterred, even when Daisy's Grandpa Carl utters his famous words "will you just shut up". I will not apologize for the subject matter this week. You can read it and take my advice or not. Just don't come crying to me if you fail to ignore my warning. I am soooooo not afraid to say "I told you so", spiteful gal I am.
I was once asked "What is the one thing that is the biggest danger to travelers?" What a question. I could come up with hundreds of answers to that. Quite frankly, traveling is a risky business. Does that mean you should stay home? No way, staying home is risky too; that whole electrocution in the bathtub thing. There are things that a savvy traveler can do to avoid misfortune on the road. Be inconspicuous, stay clear of shady areas, keep valuables out of sight, travel in groups, don't use a fake piece of trash debit visa or master card, yada, yada yada…. What was that last one? One of my favorite radio talk show hosts is the illustrious Clark Howard. As much as I would love to take the credit for tagging those nasty cards with their great moniker, I defer. He doesn't call them fake piece of trash Visa or Master cards without good reason. Having one or more of those in your wallet while traveling is like prying open Pandora's box with a crow bar. For those of you struck dumbfounded by that, let me "splain a few tings"

When I refer to debit cards I am specifically speaking of the ones with VISA or Master Card Logos on them. Whether you select debit or credit for your transaction, it is all the same. From here on in this article, assume any transactions made with the card are subject to my criticism. As you all know the main difference between credit cards and debit cards is that each time a consumer uses a credit card, he or she is incurring debt to a credit card issuer, while a debit card user is spending his or her own money that is being withdrawn from funds in an existing banking account. Basically with one card you spend money you already have and with the other you spend money you, ugh, hope to have. So it seams that using the debit card would make sense. Well, in essence it does, but in the case of most consumers, the potential harm heavily outweighs the good, especially when you travel. Here are 10 reasons why I want you to ditch the debits:

1. Debit cards don't offer as much protection against fraudulent use as credit cards do. I don't want to hear one more person tell me " well, my bank offers full protection, I have nothing to worry about". When was the last time you tested that theory? Thought so. I do admit that banks are offering more protection than they did in the past and, the exact protection can vary from one card to another. This is especially true if a debit card has been taken and has not been reported as stolen in a timely manner. As with credit cards, the law caps your liability at $50, but only if you report the fraud within two business days of learning about the loss. Miss that deadline and you're legally liable for up to $500 if you report the loss within 60 days. Delay longer than that and your liability is unlimited. Despite a few well-publicized cases of criminals substituting fake terminals to capture PINs, most debit card fraud occurs when someone gains access to your account information by stealing your wallet or a paper bank statement. So now you are wondering why the big deal? Unlike credit cards where you can dispute a transaction as unauthorized without reporting the card as stolen. With debit cards, unless you report it as stolen, you are at the mercy of the bank, which brings me to my next point…

2. When a dispute arises with a transaction, either unauthorized, incorrect amount, double billing, non-delivery of services or other, you are in a weaker position when you use a debit card vs. a credit card. When you use a debit card, the merchant has the money and you don't. It's like one of those possession is 9/10ths of the law kind of things. That means that while the dispute is taking place, your money will remain with the merchant and will only be returned if the dispute is mutually settled in your favor at the end. Regardless of what your bank promises to do for you in these cases, it is still a scary proposition. Once money has been paid from your account, you lose leverage if a problem crops up with your transaction. With a credit card, you usually have not paid for the item yet. This is a big incentive for the credit card issuer to intervene on your behalf. The issuer, and not the consumer is now the one holding the bag and trust me, they want their money back. All credit cards offer at least minimal protection from not only fraudulent use, but also for non-delivery of merchandise or services, faulty items and billing errors. Few if any debit cards offer these. For example, you book a plane ticket 6 months in advance and pay with a debit card. One week before the flight, the airline shuts down. Guess what, you are up the proverbial creek with out you know what, while the passengers who paid with credit cards, got refunds from VISA. Why not you? Your debit card has a VISA logo and you processed it as a credit and not debit? It is not a real credit card and only REAL CREDIT cards have these protections.

3. Not only will you have the headache of trying to dispute a transaction or fraudulent use, you may also have to deal with the effect it can reap on your finances. While the fraud or dispute may eventually be ruled in your favor, the time it takes to resolve the problem means you may not have that money in your account. In English that means your checks would make good tennis balls, bouncy bouncy. Oh, and the best part is that if you default on too many things, it can affect your credit rating. Doesn't that make you feel warm and fuzzy. "Oh, but my bank says they will replace the funds associated with any dispute or fraud within 24 hours." Hope you have wings to fly all over town to let the people you wrote checks to know that they need to hold them for 24 hours. Just think about all the $20.00 returned check fees you will have. If you are lucky you may get some of those reimbursed, but you'll have to fight for them. Federal regulations allow banks up to 10 business days to replenish funds and Visa cuts that to five days for its member banks. Although some banks may give you provisional credit in as little as 24 hours, you have to first find out about the problem. Call me crazy, but most criminals do not alert you to the fact that they plan to empty out your account. Unless you check your account online hourly round the clock, it could be many hours or even days before you know what's going down. How would you like to be in the middle of a 7 day cruise out at sea making expensive ship to shore calls to your bank to find out why your fruity drink purchase was declined. Worse yet, how about being in a foreign country, stranded with no cash and no money in your account. Once notified, credit card companies issue provisional credit usually within an hour. Better yet, you still have money on your bank, safe and sound.

4. Cash is King! While some debit cards are beginning to offer rewards, they are still far fewer and less valuable than those rewards that credit cards offer, like CASH BACK!!!! All of my credit cards offer either cash back, or cash back. No points, no airline miles, just CASH. My American Express Blue gives me 5% on groceries, pharmacy purchases and gas as well as 1.5% on all other purchases. Think about how much you spend on those items with your debit card and get nothing, I get CASH. Response: "My bank has a 'save the change' program". It's your change to begin with so who cares if they save it for you? Actually you should care. Most mega banks that issue those fake cards offer interest rates so small you need an electron microscope to see your interest. I prefer to save my own change and my CASH back with an online bank offering 5.25% interest. So go ahead and keep your change earning .00001% interest.

5. Speaking of interest, when you use a debit card, the money is immediately taken out of your banking account. With a credit card, there is a float period between the time you make the purchase and the date the credit card bill is due. This means that you earn a little bit of extra interest on your money when you use a credit card vs. a debit card.

6. Credit cards often come with added benefits, such as extended warranties on products purchased and insurance for rental cars and airline travel. Debit cards do not offer these services, and that means you will have to pay extra for them if you want them. In the travel business this can add up to big bucks.

7. When using a debit card, you must be diligent in keeping track of what you purchased. So while you are on your cruise, keep a little notebook with you and make sure to write down each cocktail. After a few drinks you may make a mistake on the balance and cause you to think you have more in the account than you really do. Then when you get home, guess what, accidental overdrafts. Unfortunately, banks aren't always helpful when it comes to figuring out how much you have in your account. Some banks report your balance from the ATM as what you have in the bank, plus courtesy overdraft, leading you to believe you have more in your account than you really do. This shady practice can cause you to spend more than is in the account and rack up overdraft fees. With a credit card, once you hit your limit, you get cut off.

8. Transactions and payments made through your debit card are not reported to the credit agencies like they are with credit cards, meaning that your good habits don't help you build your credit score. With credit scores now carrying greater importance in many personal finance areas, building this good credit is becoming more and more important.

9. Most car rental companies and hotels will not accept a debit card as a deposit on a rental car or a hotel room. In the cases where it is possible, you better be made of money in order to use it. The vendor will often freeze a portion of the money in the account, during the rental period or hotel stay. It can take up to a week to release the funds after the car has been turned in or you have checked out. This means that even when you believe you have money, it may not be available for use, and this can cause you to be overdrawn. One of the WORST possible places to use one of these cards is on a cruise for your shipboard account. Most ships operate on a cashless system whereby passengers pay for everything on the ship with key card. The charges are then billed to the passengers credit card at the end of the voyage. Each night the ship gets an authorization for the days new charges from the credit card. If the passenger has used a debit card, funds from that account are frozen. At the end of the cruise, when the final charges are sent to the credit card, the authorization is used for the charge. With a debit card, the funds are released, but as I mentioned before, it can take up to a week for them to be made available for use. This means that the charge is deducted from the remaining funds in the account and not the previously frozen funds. If you plan to use a debit card on a cruise, make sure you have at least double the amount you plan to spend in your account, or you may be asked to pony up cash at the port when your debit card is declined.

10. The word debit is forever entwined with the word fees. Banks love to charge fees for anything and everything. Try and use that fake card outside of the US and your fees will double and even triple. They get you for foreign exchange, and foreign usage. Credit cards never have fees for use in the USA and while all except one charge foreign exchange fees, they are paltry compared to what a debit card will charge you. So who does not have any foreign use fees? Capital One.

Many banks can issue ATM cards without the VISA or MC logos. They don't like to do this because the fake cards generate more fees for them. Secondly, you can ask your credit card company to lower limits on your credit cards so that you don't go overboard with charges. Lastly, if your credit is so bad that you can not get a real credit card, then you should be home working to pay off debt and not gallivanting around on vacation. Even people with really bad credit card get at least an Orchard bank or Providian card.

Don't get me wrong, I applaud those who use their debit cards wisely as a debt preventative measure. I also truly understand how some people can get into trouble with credit cards. My point though, is that if you are disciplined enough to balance your check book each time you use your debit card, then you should have enough brains in your head to do the same with a credit card. Most cards can be paid online instantly through your checking account. I check all my cards almost daily for errors and make payments several times a week. All of my household and daily expenses are paid with my cards and I find it easier to make several quick online payments than to write checks or use debit cards. In addition to the ease of payment, I get more protection for my purchases as well as perks, like free money.

Confession time. I have a fake piece of trash Master Card in my wallet and I do travel with it. Now hold on, before you call me a hypocrite, I have an explanation. While I prefer that you do not use it for purchases, it is ok to have one if you take precautions. My card is from a checking account I keep at USAA bank. I have a small savings account there but I do not use it as my main banking institution. Before leaving on a trip I transfer a the amount of cash I think I will need from my main bank to the savings account. I then transfer only a small amount into the checking account. The card is linked only to the checking and can not access the savings. I use the card for cash from an ATM at my destination. If I need more, then I can quickly transfer from the savings to the checking online. Most of the time the account is near empty and at no time does the account have more than two hundred dollars in it. There is also no way for anyone to access my main bank accounts at my other bank through the card. Bottom line, I lose my card and at most they get a few dollars. The only reason I keep the MC logo is for emergencies overseas. If I am not able to find an ATM that takes my card, I can always get cash from it at a bank or exchange office. I use this particular bank because they reimburse me for any ATM fees I am charged by other banks. I only use the card for cash and NEVER for purchases. That is an example of the smart way to use those cards.

If you do plan to travel abroad (including Canada, the Caribbean and Mexico) in the future, here are a few helpful hints. Do not buy any foreign currency before you go. No matter where or how you cross the border there will be an ATM machine close by. This is the cheapest and easiest way to get foreign currency. If you are smart you will have followed my example and set up a special account for your ATM card that is not linked to your main bank accounts. When shopping for a new bank, try to find one that will either cap your fees or reimburse them. If you are lucky enough to be a USAA member, use them. To find out if you qualify go to www.usaa.com. Even with fees, getting cash from a foreign ATM is cheaper than using an exchange office or going into a bank.

For purchases, a REAL credit card is the way to get the best exchange rate. As much as I love my American Express, I do not use it while outside of the US unless I absolutely have to. They charge me 5% on foreign transactions. The card I use is my Capital One Visa. Capital One is a company I both love and hate. The customer service is not terrible, but not outstanding either. It is easy to check statements and make payments online. What I hate about them is that they do not report your credit limit to the credit bureaus. Part of your credit score is how much of your available credit you actually use. Since they do not report the limit, it appears that you are using your full credit line at all times. What I love about them is that not only can you make a payment every 24 hours online, but they do not charge any foreign transaction fees. They are the only US credit card issuer that does that. It is for this reason I will continue to carry not one but two of their cards, oh and the CASH BACK they give me.

The moral of the story is that REAL credit cards are a useful tool if you know how to use them and are smart enough not to abuse them. While I would prefer that you never use those things for purchases at anytime, please please please consider what I have said. When you travel, please use a credit card for your own protection. Lastly, I just know that someone is going to write me and ask " What did this have to do with a dragon? I didn't read anything about a dragon. I thought you were writing about China this week?" It's an implied metaphor!!!!!!!!!!111 Where is that sinkhole when I need it.