Days Could Be Numbered For Free Debit Card Deals.

ONE nice thing about debit cards is that they're usually free. Most banks don't charge you fees for using them. And you don't waste money on interest payments, because you can't use debit cards to run up debt.

But will these cards stay free? A handful of banks and merchants are starting to charge fees when the card is used.

A debit card looks like a credit card. It usually carries a MasterCard or Visa logo and is accepted wherever those credit cards are used. Typically, your debit card is your ATM card, too.

But when you use a debit card to make a purchase, you're not buying on credit. You're effectively paying by check. The merchant's bank will "cash" the debit by taking money directly out of your bank account. (Remember to deduct the purchase on your checking-account register.)

The American public is rapidly adapting to debit, says Tracy Connelly, a Visa vice president. Card use, for making purchases, has grown from three times a month in 1993 to 14.5 times a month in 1999.

There are two ways to pay with debit cards. During offline transactions, the merchant swipes your debit card through a machine and you sign a receipt. It feels just like buying something with a credit card. In fact, the banks call this the "credit" function of debit cards. Offline transactions are processed within a few days.

While making an online transaction, you put your card into a reader and punch in your PIN number. Typically, the money will jump to the merchant's account that very day.

From your point of view, it hardly matters which type of transaction you use. To the banks, however, it matters a lot.

Each time you make a purchase with a debit card, the merchant pays your bank a fee. The banks collect more when you shop offline.

For example, say that you buy $40 worth of groceries. On an offline transaction, the bank will earn around 60 cents to 65 cents. Online, it will earn only 5 cents to 17 cents, according to a survey by Bank Network News, a trade paper in Chicago.

Consumers are also using online debit transactions to get extra cash. Many supermarkets, gas stations and convenience stores let you take extra money, on top of the price you pay for the merchandise.

By contrast, if you went to an ATM for cash, you might be charged $1.50 (unless the ATM belongs to your bank).

So the banks have two masons for getting you to shop offline. First, to drive you back to the ATMs for cash. And second, because offline transactions pay them more.

If you stubbornly use your debit card online, several banks now charge 50 cents per transaction, if the balance in your checking account falls below a certain amount. These include Riggs Bank based in Washington, D.C., and Chase Manhattan in New York. Minneapolis-based TCF Financial Corp. charges 50 cents in a few states.

Cleveland-based National City Bank charges 25 cents per transaction for excessive online use by people with low balances. ("Excessive" means more than 25 checks, ATM withdrawals and online transactions per month.)

Offline use is still free at Riggs, TCF and National City. Chase Manhattan declined to discuss the issue further. Pittsburgh's Mellon Bank charges monthly fees to some users but refused to go into detail. That's a reminder to customers to read the fine print.

You won't be charged by supermarkets for online use, says Todd Hultquist of the Food Marketing Institute in Washington, D.C. They want you to make the online choice.

However, some smaller stores may charge online fees. Other small stores might also require you to spend a specified minimum amount before using your debit card offline, says David Gosnell, senior editor of Bank Network News.

How do you know if you've been charged a debit-card fee? It should show on the card reader when you punch in your PIN number, or on the receipt you get from the merchant, says Elizabeth Costa, a director in the financial services group for Boston-based Dove Consulting.

Costa believes that the banking industry will be slow to add fees to debit cards. The business is growing at 30 percent to 40 percent a year, she says. This is a growth area for banks, and they don't want to kill it.

When the market grows more mature, however, charging may pick up.

Defeating Financial Dysfunction

How can you improve your financial life? Getting it all together is the top resolution for the millennial year.

I'll give you a tip. You don't sit down with calculators, budget books and charts. You look into yourself.

"Financial planning isn't that complicated for the average person," says planner Bert Whitehead of Cambridge Connection in Franklin, Mich. "What's complicated is people's fears, and the things they think they know but that aren't correct."

Here are Whitehead's symptoms of financial dysfunction:

* Mortgage aversion: You remember your parents burning their mortgage, and you want to do the same thing, soon. So all your spare money goes into paying off your home. You're thinking only about saving on interest expense, by prepaying the loan.

But working people also need to build up their financial assets. If you have spare money, it's better to maximize your contribution to a retirement plan than to make mortgage prepayments.

* Inappropriate risk reaction: You may be unreasonably afraid of stocks. Conversely, you might take unreasonably high risks.

For the fearful, Whitehead suggests starting out with a small mutual-fund account, to see how it goes. Plungers, he says, could set aside 10 percent of their money for crazy bets and invest the rest soberly.

* Compulsive spending and excessive debt: You say, "I just don't make enough money." In troth, you need to cut up your credit cards and develop a plan for getting out of debt.

* A poverty mentality: If you're in business, you're afraid to charge more for your services. If you're employed, you're afraid to ask for more than your company's standard 3 percent raise.

In today's strong economy, consider looking for a higher-paying job, Whitehead says. Even if you'd rather not leave your current job, an outside offer gives you credibility when you ask your boss for more money.

* Windfall woes: Windfalls come in many forms: an inheritance, super stock options, even a winning lottery ticket.

With unearned money, any dysfunction you suffer already is likely to be magnified. You may feel overwhelmed. Don't do anything with a windfall until you lay out a plan. You'll need lots of financial education, and lots of introspection about how you want to live.

Syndicated columnist Jane Bryant Quinn can be reached in care of the Washington Post Writers Group, 1150 15th St., Washington D.C., 20071-9200.