Debit cards are useful. No doubt in that. But is it the most convenient way to live a cashless life? Obviously not, because we have credit cards and other prepaid cards.
Giving a one-liner, debit card grants you direct access to your personal savings/checking account, hassle-free and easily.
But one can seriously argue, why to use debit cards, when we have credit cards, prepaid cards, and retail cards!
In this post we will try to give an overview of debit cards, how significant it is to use debit cards, and the dos and don’ts of debit cards!
What is a debit card? And how is it used? An overview:
A debit card can be called your portable savings or checking account that you can carry with you anywhere.
With the coming of debit cards, the need to carry liquid cash has decreased quite a bit.
Even if you need liquid cash somewhere, you can easily go to the nearest ATM and have your cash withdrawn.
But remember, unlike credit cards, debit cards access cash straight away from your personal bank account. So, if you are not responsible while using your debit card, then you will just drain out all the cash from your personal account.
Previously the only convenient way to withdraw money from an account was to use cheques and withdrawal slips available at the cashier’s counter.
But now we have debit cards to ease out the process and make money transfers and withdrawals lot less time taking.
How significant is it to use debit cards?
This question is a bit childish but I hear it quite often even among my peer groups.
We have progressed to debit cards from paper cheques and slips because of a lot of reasons.
The first was the invention of ATM cards that were only used to withdraw liquid cash from ATM counters.
Then these cards could be used to make purchases at few popular stores and while booking flight tickets, movie shows, etc.
But finally, we have debit cards, which we can use nearly anywhere we want, from normal day to day transactions to transferring money from one account to another.
So the above question is pretty much invalid in the present day as nobody wants to carry on with liquid cash, which is so inconvenient and dangerous in bigger amounts when we can use square inch sized thin plastic that fits in our pockets.
Moreover, debit card withdrawals are not limited as before. Previously your total transaction amount could not exceed your total available account balance.
As of now, every bank has an allowance called overdraft limit to cater the emergency needs of a debit card holder.
You can now exceed your account balance limit while doing transactions, but there will be interest for the extra amount you withdraw, just like a credit card.
So, if your account balance is $1000 and overdraft limit is $200, then if you finish your account balance completely, you can then withdraw an extra $200, but you will be charged extra on this amount.
But with every single invention comes more and more problems associated with it.
Since debit cards are directly linked to your personal accounts, there are bigger chances of fraud activities taking place surrounding debit cards.
One such example could be identity theft. Your debit card can exactly reveal the same information as displayed in your personal account details, like your account no, and other important hidden codes.
Losing such information can bring in huge problems, with the biggest one being your account getting hacked!
Keeping all the things in mind here are the dos and don'ts of debit cards:
- Never try to exceed your account balance while doing transactions, because this amount works like credit and you will have to repay it back with interest.
- Never disclose your account information, card number, or other details to any third party, so as to avoid chances of fraudulent activities and account hacks.
- Usually, it is advised to do online purchases with credit cards, especially during Cyber Monday or Black Friday shopping, coz if you want a refund on any item and you don’t get it, at least your personal account balance won’t get dinged.
- Change your debit card PIN at least twice a year to avoid getting your PIN getting copied or duplicated.
Also don’t set predictable PIN as hackers are really brilliant at finding probable PINs while initiating fraud activities. - To avoid hefty debit card fees, try to avoid overseas transactions and have a detailed talk with your respective bank’s personnels to see how you can cut down debit card fees.
I hope by now it is clear how a debit card works and how you should use it.
Debit cards are very personal items and should be used carefully. If lost, you can block your debit card over the phone by calling your respective bank’s customer care support and issue a second card within a few days time.