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Debit cards have overtaken cash as the most popular way to pay for commodities. These cards allow the cost of goods/services to be deducted directly from your checking account. They can also be used at ATMs to withdraw cash. Most institutions will offer you a debit card once you open an account with them, so they are easy to obtain. Debits cards are convenient, safe to carry around and readily accepted in most financial institutions globally.
The most attractive feature of a debit card is that it facilitates cashless transactions and also limits your spending. You cannot exceed the set limit because it would be impossible to spend more than you have in your bank account. The advantage is that you will not accumulate new debts unlike credit cards that may make you spend more than you have and regret later on.
Here are some interesting facts about debit cards:
- Types of debit cards
There are two types of debit cards which include traditional and deferred debit cards. The former is issued through the bank and requires an input of your PIN for a transaction to be completed. It deducts the purchase price almost immediately after making the purchase. They are mostly used at gas stations, supermarkets and stores. On the other hand, to use a deferred debit card you sign for the purchase or use a PIN and unlike the traditional debit card, the purchase price when using a deferred debit card is deducted from your checking account two to three days after. They are also issued through a bank but has a logo of a big credit card company.
- PIN gives the best protection
Most consumer experts do not advocate for pinless debit payments since they do not offer as much protection as the PIN based ones, which is the entire purpose of a PIN. With a PIN based debit card, you cannot make a transaction without the PIN number which makes it impossible for anyone else to use your debit card. Anyone could pick up a signature based card and sign your name to it and make all sorts of transactions which could limit the number of places you use it.
- Return policies can vary
Many people like to treat debit cards purchases as they would with cash or check which is not right. When using a credit card, you have the choice to withhold the payment in case you are unsatisfied with the quality of the item but this law does not apply to debit card purchases. Debit cards are the best way to pay for items such as gas, groceries that is everyday items but then it would not make much sense to use them expensive services or when ordering merchandise.
According to research, one in every five banks will add a charge on each transaction done through entering a PIN. Other fees include ATM use and also holding the debit card itself. On average, 15% of debit card holders are subjected to debit transaction fees. It is therefore important that you find out what kind of debit card your bank offers and also enquire about the fees before you pick one.