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Sebit cardsDebit cards have become one of the most widely used cards. Almost every bank issues these cards excepting a few. With no interest rate charged on these cards and various types of programs available on these cards they are one of the most treasured cards. The best deal of having a debit card is no hassles of paying a monthly bill and zero liability fraud protection. Debit cards are best defined as an electronic check that can be used at the ATM and also as an alternative to cash when purchases are made. When you use the debit card for making a payment your account is directly charged for it.
These days most of the banks have started issuing debit cards in the form of combined ATM/ Debit cards. These cards when used at ATM's require a PIN number and when used for making payments need your authentic signature and also PIN number. Lets us see the advantages are disadvantages of using a debit card.
Pros and Cons of using a debit card
Making the use of a debit card has its own advantages and disadvantages. It should be kept in mind that when you use these cards you should be able to keep a track of your finances and should be able to manage your debts.
Advantages: Some of the advantages of using this card include:
Convenient to use over cash and checks
There is no interest rate accumulation or charged when you use these cards
They are widely accepted
The approval process is easy
You can get one despite bad credit
Disadvantages: Using a debit card can also prove to be a difficult at times. Some of the disadvantages include:
These cards are more susceptible to frauds as compared to credit cards
If your card gets stolen or is lost then the process is stricter as compared to credit cards and greater liability is involved
You cannot enjoy the option of deferred payment
You account is charged directly when you use the debit card
The payments that are made towards the purchases are not reported to the credit bureaus
There is a monthly or a per transaction fee involved with these cards and this varies from one bank to another
Your debit card cannot be accepted every where in contrast to the credit card
There are many banks that have a condition of minimum amount availability in your account before you use the card
You should be sharp enough to handle your accounts when using the debit card
Debit card vs. credit card
Keeping a debit and a credit card side by side and then comparing them is very difficult. A debit is used more like a check in contrast to a credit card where you pay later. When using a debit card your account is charged automatically. So the amount that you have in your account serves as the limit to your use. However, there are some banks that would allow you to use more money than what is available in your account but you would have to pay a heavy overdraft fees.
When this feature is compared with a credit card you would see that it is similar to using taking a loan from the bank. You use the card without depositing money and get a monthly bill for the purchases that you have made. In case your bill accumulates you are required to pay interest rate on the bill. Credit cards are given after assessing your employment status and your credit rating whereas debit cards are given out just on the basis of your bank account.
How to protect your debit card
When using a debit card you should be very careful. It is important that you protect your account number as well as your card. If misplaced your account can be cleared out way before you come to know about it. If your debit card goes missing either lost or stolen or you have a feeling that it being used fraudulently, you should call up the bank immediately. Ask them to block your card and check the last usage of the card. It is always advised not to carry your PIN number along and it is better to memorize it. Do not give your PIN number to anyone.
Tips for using a debit card
Since debit cards are also called as ATM cards and are issued by all the banks you can apply for this facility at your bank and use it at the ATM machine as well as for making purchases. When using a debit card you should use your Pin carefully and make sure that it is not a very obvious number, keep a check on your account balance, make sure that you collect your sales receipt and also its carbon copy as these are important and should not go into wrong hands.
Make sure that you keep a record of all your transactions with your debit card and review your statements every month carefully. If you find any suspicious transactions you should call up your bank immediately to get details about it and make sure that necessary action is taken. When using a debit card it is very important that you maintain your finances so that you have an idea as to how much can you spend with your card? Using a debit card is a lot easier if you keep a track on your finances.
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