Debit cards are one of the most common forms of payment used in the world today. These are cards that look identical to credit cards, which are linked directly to your bank account. When ever you make a purchase, the funds are taken directly from your account, resulting is a simple and quick transaction. Debit cards are also known as “E-Checks” and didn’t come around until the late 1970’s, but they have changed the way that we purchase things globally. There are some spectacular benefits from using a debit card as your form of payment, but some negative things to consider as well.
The Advantages of Debit Cards
1. Extremely Convenient
The biggest draw for debit cards is how simple they are to use. Since the payment is taken directly out of your bank account, where the money already exists, it can be done instantly. This is much faster than having to wait for a credit transaction to go through, or having to worry about having enough cash to cover your expenses. It is especially faster than writing out a check, which many people no longer take.
2. It’s A Cash Card Too
Sure, debit cards are nice, but sometimes cash is a necessity. If you are going garage sale-ing or to the flea market, you may have to have cash to make the purchases that you want to. Debit cards still have the ability to give you cash, you can take them to an ATM and use them there to withdraw the cash. In addition to ATM use, the majority of stores offer cash back options at checkout.
3. Your Pin Protects You
Debit cards are protected by a four digit pin number that you set yourself. This pin is needed to make almost any purchase with your debit card. This gives you a great deal of protection against theft. These cards can also be canceled very easily and quickly, so if you lose it, you can prevent anyone from being able to do any damage.
4. Anyone Can Have One
The only thing that you must have to have a debit card is have a bank account. Anyone can open a bank account with a small minimum deposit. This makes debit cards much different than credit cards, because approval for a credit card largely depends on your credit score and payment histories. None of these things are taken into account when getting a debit card.
5. Strong Budgeting Tool
One of the best things about a debit card is that you cannot spend more money than you have, which means you cannot go into debt. This helps you to only spend the money that you have to spend because you cannot accumulate new debt, like with credit cards.
The Disadvantages of Debit Cards
1. Your Credit Score Isn’t Helped
A person’s credit score impacts them for their entire life, whether it be negative or positive. With a debit card, you do not impact your credit score at all, which means that you cannot build it up. Having a higher credit score gives you lower interest rates and increased lines of credit.
2. Fees Galore
When you have a debit card, fees are likely a part of your life as well. Banks inflict a wide variety of different fees to debit card holders, which can add up very fast. Some of these include monthly use charges, major overage fees, and transaction fees or limits.
3. Instant Money Means Instant Risk
If someone got a hold of your debit card, they would be able to take money directly from your bank account. With a credit card, the charges are much easier to dispute, and they do not interfere with your direct lines of income the way that debit cards do.
4. Merchant Blocks
Depending on where you are using your debit card, or what you are buying, the merchant can put a “hold” on your money. For example, if you are filling your tank up with gas, the gas station will likely put a hold up to 100 dollars on your card, this is because they want to ensure that you have the funds to pay for the gas before you pump it. The bank can take up to 48 hours to free this money up again.
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