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More and More, I’m Thinking of Stopping Our Debit Card Use

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We rarely use cash and instead we use our debit cards for everyday purchases. We still have one credit card (that we pay in full a few days after using) for internet and recurring charges. I like to have everything electronic, but something that happened today (well, yesterday now) gave me the creeps.

I returned an item to Walmart today and the woman asked if I wanted the credit back on my card. I said yes. I was ready to get my card out of my wallet when all of a sudden I noticed the receipt for the refund printing.

Wait a minute…you mean my card information is stored within that barcode on the receipt? Maybe I’m over reacting, but that freaked me out. I’ve always had to present my card for refunds. Walmart having my card information stored on the receipt like that makes me very uncomfortable.

My particular debit card does have a protection policy on it for unauthorized charges. I have read that it could take days to straighten everything out and get funds put back in an account if something like that happened. That would be devistating to me with the automatic drafts I have. I get chills just thinking about it.

In the past, I’ve briefly thought about only using our one credit card for all purchases so we can receive cash back bonuses. I decided against it because I was concerned that our spending could get out of hand. I think I may revisit that decision and see if there is a way we could make it work. Or perhaps I could look into other alternatives.


30 Comments

  • Reply Amber |

    AJ is correct. To add to that, Visa just recently started enforcing encryption of all numbers stored so the stores don’t actually have the number just the encrypted information. I work for a company that processes data from point of sale systems and one company in particular, when they updated one of my customers with the new encryption, started sending me all sorts of information that I didn’t need and couldn’t use. It was a mess to sort out but on the other hand, nice to know it’s a requirement now for it to be encrypted.

    So as for your original fears, no nothing on the bar code generated for the receipt actually has your information on it. Rather it is an identifier for their credit card processing software which has your information (encrypted) and can process the refund.

  • Reply Flexo |

    On the point, credit cards do offer more protection than debit cards and if anything does go wrong with your debit card, you *will* be out the money for a period of time, during which overdrafts could be more likely, as well as the resulting fees. If there were fraudulent debits, you’d have a case for having those fees refunded, but the whole process will be a hassle when it could not have been if the same thing happened with a credit card.

  • Reply AJ - IAmFacingMillions.com |

    I’m not sure the credit card information is stored in the bar code on the receipt rather the bar code on the receipt identifies the transaction(s) which is stored in the Wal-Mart computer system for a period of time.

    When the transaction is recalled, the computer system itself (not the information on the receipt) remembers the credit card number and is capable of processing a refund. This is more common practice than you may suspect. I know several other major national specialty retailers that operate this way.

    But even when they don’t refund automatically, make no mistakes about it, the computer systems store information on every transaction they process including the entire credit card number.

  • Reply Drew |

    To add to AJ & Amber, refunding money back to your card without having to re-present your card is something that a very large number of businesses can do. For example, if you go the local pizza shop and accidentally get charged twice for the pizza because of a dorky clerk, then later that night the bookkeeper would probably notice and can use the ‘transaction id code’ from the transaction to reverse it. Or they could even partially refund later if they find they overcharged. A little pizza shop like that doesn’t even store the credit card info on their computers, but instead it is all taken care of by their payment processor. In Wal-Mart’s case they probably ARE actually storing your credit card info, but it is on a highly protected server somewhere. The barcode is simply part of that ‘transaction id code’.

    If all that conjecture doesn’t help alleviate some fear, then also know that storing ANY info about your credit card on the barcode is against PCI/CISP rules & Wal-Mart would never risk getting into trouble in that arena.

    After all that, however, I definitely think that you should try using your credit card for all your purchases. As a long time debt sufferer who recently became debt-free, I can say that once I learned to control spending, I was in a position to capitalize on the REAL benefits of credit cards, namely: cash-back bonus rewards and consumer fraud protection.

    In a world where big business nickel and dimes you to death (especially in the financial industry), there is a sweet irony to receiving free money and making the credit card companies take the hit when something goes awry…all without giving them a cent back (which they should, given what they charge to process transactions). As long as you work hard to control your spending and pay it off right away, I think you should take everything you’re entitled to.

  • Reply Courtney |

    Hi- just found your blog from a blurb in Parents magazine and have added you to my blogroll. I am very impressed what you have accomplished in a short period of time and you are an inspiration!

    We use the envelope method for cash. One for groceries, one for household items, and then we each get an allowance. Our allowance pays for eating out, entertainment, gifts, etc. Any leftover cash goes to a kitty fund for Christmas gifts.

    We do use credit cards for fixed expenses like day care and I also use it for gas purchases as I don’t want to haul the kids into the store to pay for gas.

  • Reply motomom |

    I think stores began adding the credit card information to the receipt right around the time they began a new policy of no refunds without a valid receipt. Having the information stored in their computer is actually helpful if for some reason you can no longer find the receipt.
    I recently began using one of our credit cards for all of our purchases to benefit from the cashback feature. I am using it to get gift cards for new towels and will probably continue using it to get gift cards to purchase Christmas gifts. You do need to be a bit more diciplined because the transactions do not post immediately so it is easier to overspend. However, if you do not change your shopping habits and keep your receipts and a running tally of what you have spent you should be o.k.

  • Reply Nancy |

    I have a friend who recently told me that it’s very difficult to dispute or get debit card issues resolved in a timely manner. She went through this & swore off using her Debit card every again. HOWEVER, she does recommend that you use your Check Card feature instead of your Debit card because it’s backed up (in our case) by Visa at our bank.

  • Reply danielle |

    Yup, lol, Walmart recognizes my card, too. It still asks for my pin, but I don’t have to do as much stuff as I did the first time I used it there.

    I am beginning to wish that we didn’t have the checking account at all. It would be nice to have just savings, and cash. Debit transactions take too long to go through, and we constantly have to keep at least a hundred bucks in there to cushion things that might still be going through from last week. I don’t like it.

  • Reply bluntmoney |

    I actually got a credit card for a related reason: I had a very large unauthorized charge on my debit card, and the bank told me flat out that it was up to me to get the money back.

  • Reply Beth |

    I suggest using a credit card, but treating it like a debit card–subtract each transaction from your checkbook when you make it, like you did with a debit card. I don’t write it in my checkbook, but I have an Excel file set up where I just enter each charge to my credit cards.

  • Reply Beth |

    If you choose to use a credit card, treat it like a debit card–subtract each transaction from your checkbook when you make it, like you did with a debit card. I don’t write it in my checkbook, but I have an Excel file set up where I just enter each charge to my credit cards.

  • Reply boomie |

    I wouldn’t recommend you use a credit card to make purchases. Too dangerous to overspend. It is true that companies now are having their computer databases broken into by employees. For example: T.J. Maxx, Marshalls, Stop and Shop to name a few (I have shopped at all of them) and I got a letter from my bank stating my Visa/Debit/Bank card number came up on their list. My card was replaced but I have since stated using cash. DO NOT GIVE A SALESCLERK YOUR PHONE NUMBER OR ZIP CODE. You are there to shop NOT provide data for their marketing schemes.
    I’ve also deleted my personal credit data out of amazon and any other online shopper I used to buy from. Now, if the online company has a phone, I call in the order. No phone-I don’t place the order.
    Even if you pay cash at Wal mart, data is still stored in the bar code on the receipt.
    My two cents- start using cash. There is no fear in cash.
    PS: Wal Mart is my favorite store.

  • Reply NIUiceprincess |

    Macy’s has that same method when processing returns…they just scan the bar code on the receipt, and they don’t even ask for your card or ID. It’s pretty creepy, what if a shady store employee just randomly grabs one of the receipts from the drawer, scans it and takes your credit information that shows up in the computer??? I don’t know if it’s possible but it’s a thought that occurred to me.

  • Reply Wallowgirl |

    I haven’t been using my debit card that much either. Not just for security reasons, but for spending reasons. It’s hard to keep track on the debit sometimes when you charge for little things here and there. That’t why I love my American Express. I have to pay it off by the end of the month. I can track much easier on what I spent for the month.

  • Reply FlatGreg |

    NIUiceprincess – I’m 99% sure when a receipt is scanned no credit information is presented to the employee. The barcode just identifies the transaction and the payment system knows how to reverse it. It’s actually probably safer than having to give them your card again.

  • Reply Marcy |

    Boomie — For the very reason you stated, I had called in a purchase to an online flower company to place my annual Mother’s Day order. Even so, that did not prevent my credit card number from being hijacked and used fraudulently (yes, I can narrow it down to that exact transaction as the catylist that led to the fraud). Thank goodness I have a very good card issuer (USAA BANK) that acted immediately and limited the fraud. The point of my statement is that even calling in a charge versus online use does not prevent fraud unfortunately.

  • Reply boomie |

    Marcy,
    Wow. It’s a scary world out there. I’ve heard even using a charge card at a restaurant can get your identity stolen. Best still to just use plain old cash.

  • Reply MVP |

    Don’t forget online retailers (I mostly use Amazon and airlines). I’m a pretty big skeptic in this area, but I actually find it quite convenient that when I make an occasional purchase on the computer in my home office, I don’t have to go fetch my debit card. They’ve got all my info stored – heck, they’ll even store more than one card if you want them to. At first this creeped me out, but I’ve been making purchases with these companies for years now and haven’t yet experienced a problem, so I choose to take the risk. Yes, I realize we’d have more fraud/mistake protection if we used a credit card rather than a debit for these transactions, but that’s the risk we take. I’d rather not use a credit card anymore.

  • Reply Angie Hartford |

    I’m a huge fan of cash. If using it were the norm, Americans wouldn’t carry anything close to the $800 million (!) we’re currently owing.

  • Reply debtmom |

    I used to work in banking, and it does take longer to get money back from debit purchases… sometimes it was an absolute nightmare!

  • Reply ladydoughgirl |

    We’ve tried to stop using our debit cards. Not so much because of security reasons…more because we found we were spending money too easily. Somehow having to use only cash and checks makes it a bit tougher to spend money.

  • Reply Kim Del |

    As a former credit card fraud analyst who has seen what can happen, I will not even allow a debit card to be issued to me. Too dangerous. A debit card is MY money a credit card is THEIR money short and sweet. No matter how good the issuer is, they have much more incentive to stop defrauding of themselves than they will you/us.
    I have used my no-annual fee credit card for every purchase I can use it for, including phone and cable to get rewards and it gets paid off every month. The issuer keeps raising my limit hoping I will revolve the balance to cause interest, but that will not happen as long as I can prevent it. Federal law guarantees if it’s stolen I will never have to pay more than $50 and most issuers never charge that so you will get another card. Plus I get the protection from unethical merchants with the dispute process also guaranteed by federal law – as long as the dispute is in writing within 60 days of the statement the charge first appeared on. Don’t get that protection with debit either.

    Just shred that debit card and have the issuer mark the account as “never reopen” so no identity thief can call in to reopen and have it mailed somewhere else.

  • Reply Melonie K. (Workerette.com) |

    I’ve had this happen at Target, Children’s Place and other stores. It freaked me out when it first happened, but having had a decade long career in retail management before this technology was available, I can attest that it’s *probably* safer than handing your card to a clerk for a refund. Even that is safer now since card numbers can no longer be printed in full on receipts. Back in the “old days” we had to manually enter numbers back in for refunds – not only did this place your number back in the clerk’s hands (and at the time on the actual receipts), but it also left room for errors that could mess up a credit. One incorrect digit and someone else gets your refund while you get nothing. Augh.

    As a side note, we use debit cards almost exclusively, mostly because my credit cards accounts are closed in an effort to pay them off – it’s much easier to not build a bill back up if you can’t use the card.
    However, we don’t use the debit card with a pin code. Our bank (also USAA as with another commenter) pays us a % back on our checking purchases made with our debit card when we use the “credit” option. It’s not a huge amount since we aren’t big spenders, but it has added up to anywhere from $2 to $20 in a month’s time. Every little bit counts, right?

  • Reply Dennis Lorenz |

    I urge all debit card users to do a bit of googling on something like “debit card issue” and seriously consider how you use a debit card.

    1. Your liability if someone scams your debit card is up $500 if you notify the card issuer more than 48 hours after you learn of the problem – could be all your money if you wait 60 days. For a credit card, your liability is $50.

    2. When your debit card is scammed, your cash is gone – could be all of it. And it can take 10 or more days for the issuer to investigate – in the meantime, you may be getting more denied debits that you want honored like rent, etc.

    3. And don’t think that your merchant’s machine will require your debit card’s pin – it’s usually not required unless the card is used at an ATM.

    We found out about all of the above when our daughter’s debit card got stolen. She got all her money back, but it was a real pain. We also have debit cards which replaced our ATM cards (we had no choice) – we checked with our issuer and asked if we could get a plain ATM card – nope (debit cards make more money for the issuer than ATM cards). What we then did was to have the issuer set a maximum amount charged to the debit card for non-ATM transactions – $1. We use a credit card for non-ARM transactions and then pay off the bill when it comes. Also, a credit card can give you some added “insurance” that a debit card will not provide.

  • Reply Karla |

    I’m just going through this. I was fortunate enough to have caught the charges immidiately, roughly a day after they came out on my statements.

    I filed my claims and the back should be issuing me back my money latest by the 13th and then investigation begins. I went to the bank itself and they were confident I wouldnt have to assume any charges because of the history of my transactions, they were things so different than anything i would have ever purchases…fortunately I caught them before they could take all my money!

    It has been a very rough and stressful situation and it’s just begun. I am done using debit cards for as long as I live.

    People keep telling me “don’t worry you’ll get your money back” but I feel it’s beyond that now. I feel so violated. It’s horrible that there are such awful people out there…I also feel dumb, thinking thiis would never happen to me.

    Lesson learned. Debit card = hardships.

  • Reply Chris |

    It’s been a while since the original post, but I thought I might add this anyways. My wife, and 2 of her friends went to wal-mart. They all bought the same pack of gum so they could get cash back while waiting for their tires to be mounted. Mysteriously, the girl that is a wal-mart “addict” if you will, was charge 3 cents less than the other two. After that, they waited and paid for the tires. The girl that goes to walmart all the time ended up paying something like 13 or 15 dollars less than the other 22, all for the same price tires. When confronted, the clerk was caught of guard, and ended up crediting my wife and the other girl. Wal-mart doesn’t only keep track of your credit card, but what you purchase and your purchasing trends which is scary.

So, what do you think ?