Jay Honeck wrote:

Well in my case I don't have a 'real' credit card. I have a debit visa
(work just the same). I keep most of my spendable money in checking then
use the Visa the same as cash. If I can't afford something then I don't
buy it.

It does NOT work the same.

a) Don't try renting a car.

And don't try using to reserve a hotel suite. Most debit cards (unless it's
a "dual" debit/credit card) will not work with a preauthorization -- which
is what is required to make a guaranteed reservation.

Offline debit cards (that is when cards are used without the PIN, i.e.
transactions that use the Visa or Mastercard brand network) do support
preauthorization. That's a Visa/MC requirement. When the card is charged at the
merchant, the amount of sale is preauthorized instantly. On a regular credit
card, this just instantly lowers the current available credit amount by the same
amount. But on an offline debit card is used, it puts a hold on the funds in
the bank account. That means that this amount is unavailable to withdraw, have
checks drawn on, etc. even though the money is still in the account as long as
the hold exists. This is how Visa/MC guarantees that the money will be
available when the charge posts (usually 2-3 days out).

The hold goes away when the charge posts (e.g. actual transaction amount is
charged to the account) or else it times out (1-2 weeks) if no charge actually
posts.

Sometimes a preauthorized hold is put on the card without an actual transaction
amount known yet just to make sure there will be enough funds available.
Examples are pay-at-the-gas-pump transactions (usually $50 is preauthorized
before you start pumping), restaurants where an extra amount is pre-authorized
in expectation of a tip, hotels (where they preauthorize for guaranteed
reservations to make sure the card is valid, and also when you check in to
preauthorize some amount for the expected stay and possible incidentals), rental
car places etc. Also AOPA preauthorized $1 every six months or so if you have
auto-renewal to make sure the card is active. You'll never see that $1 on your
statement because they never post the charge.

It's important to understand that just because an amount is preauthorized does
not necessarily mean that it will post to your account. However it will tie up
that amount, either in credit line for a credit card or actual bank funds for a
debit card.

That is another big disadvantage to using debit cards, especially if it causes
you to bounce checks even though there is bank physically in the account but it
is effectively locked until the hold expires.

By the way, MBNA actually shows you preauthorized charge amounts AND who is
making the charge online. Most other credit issuers do not, although you can
usually see how much is pre-authorized (held) by taking your credit limit,
subtracting known charges and balances, and observing any discrepancy between
that difference and the current available credit. (Rounded to the nearest
dollar).

An "online debit" transaction requires a PIN and uses the ATM/POS networks.
Money is debited instantly and there is no preauthorizing then posting later.

I think cards that only suport online debit (e.g. no mastercard or visa logo)
are much better since if somebody steals it they can't do squat without the
PIN. That no-fraud guarantee on MC/Visa debits is nice, but it doesn't help you
right away while your checking account's been cleaned out, your checks are
bouncing, and your card won't work. Sorry for you if you have automatic
overdraft protection from savings too.