Upsides and downsides of Debit Cards explained
With more of us going cashless but not all of us able to support the interest rates generated by credit cards, the debit card is a great alternative as it still allows the convenience of shopping with a card instead of cash.
The advantages of a debit card
For starters, debit cards are safe as no one can access your account without your PIN plus they allow you to conduct your banking online and they give you 24 hour access to your money. Some of the other advantages of using a debit card are
- You don’t need to find a bank to withdraw funds
- You can use your debit card almost anywhere
- No monthly interest charges on your spending
- They allow you to have ATM access
But you must keep an accurate record of your debit card use to avoid becoming overdrawn on your account. Also, if your account balance is not sufficient to cover the transaction your card will be denied at the point of purchase and this can be really inconvenient and sometimes embarrassing.
Disadvantages of using a debit card
There are some things you will still need cash for, like money for your children for a school expense or to pay the neighbour for picking something up at the shops for you and if you don’t have some on hand it means locating an ATM to make a withdrawal which isn’t always convenient. So it’s a good idea to keep some cash on hand for those smaller expenses that require a cash payment.
Also, if your account is low on funds you can’t use your debit card for a purchase if the purchase exceeds your balance. Unlike a credit card that allows you to borrow on your credit, your debit card requires the funds to be available in your account in order for you to use it. This can be a problem if the purchase is one you need to make.
Debit cards: Other information
Another thing to take into account is using an ATM that is not one of your own bank’s machines. This can incur fees; one that is charged at the ATM and another from your own bank. Not all foreign ATMs do this though so find out which ones allow you free access, that way you won’t be paying bank fees unnecessarily.