The popularity and the usage of debit cards is on the rise. Internationally the money spent using debit cards is more than that spent using credit cards. Figures show that in Australia too this well soon be the case.

What Is A Debit Card?

Similar to a credit card but rather than using the bank’s money for your purchases, money from your own account is used for purchases - So you are basically using your own money. The card is linked to your savings or transaction account and the money is debited from this account.

Advantages Of A Debit Card

Usage: You can use these anywhere you can use a credit card.

Over EFTPOS: One might wonder why we need a debit card when we have an eftpos system? Well, the answer is simple -
* debit cards can be used anywhere a credit card is used
* debit cards can be used for online purchases as well.

Keeps You In Check One of the biggest advantages of these cards is that it keeps you in check. With credit risks there is always a risk of you spending more than you can afford…This risk is reduced to a great extent with Debit Cards. Lets say you budget that you need 2500 dollars for all your monthly expenses. So credit your account (to which debit card is linked to) with 2500 dollars…As you pay your bills, grocery shopping etc, you will always be aware of the amount you are left with…Keeps you in check….The limit is ‘what you have’ but with credit cards the limit is your ‘credit limit’…and the credit limit can be quite high. This does not mean credit cards are all negative…If used properly credit cards can be excellent - but only if used properly.

No Annual Fee: There is no annual fee with debit cards (unlike with credit cards).

Transactions: The number of free transactions you can get changes from issuer to issuer…Some charge you a set fee and offer you unlimited transactions - some have a few free transactions and in this case check whats on offer and stick to what the terms says so that you can avoid fees.

Overdraw Facilities: Some issuers allow you to overdraw once your account balance becomes zero. But be aware that the charges can be very high (more than for credit cards)…Also remember that you if keep overdrawing then the entire purpose of having a debit card is defeated.

Internet Banking: Some debit cards provide a guarantee for internet transactions - this way you aren’t charged for unauthorised or fraudulent transactions if you report them to the bank in time.

What About The Youth Market?

A lot of teenagers have credit cards these days - they are not financially literate but you are arming them with credit cards - a no no for their financial health. Debit Cards are better for this market than credit cards. Keeps them in check and they can learn important lessons about budgets (just by using debit cards). Also debit cards need no credit checks as the money used with debit cards is all your money.

Debit cards has lot of advantages…Its popularity is increasing in Australia and more and more issuers are joining in….

Do you use debit cards or contemplating getting one? Share your experiences….

Related Posts:

• Credit Card Terminology Explained
  These days Credit Cards have become a common accessory in many wallets. We can't imagine our lives without a credit card. However most of...
• Store Credit Cards - Pitfalls And Advantages
  What Are Store Credit Cards? A lot of retail giants offer 'Store Credit Cards'. Store Credit Cards are different to co-branded credit cards. Co-branded...
• Woolworths Offers Credit Cards
  Woolworths will be launching its own credit card on September 1st. Its partners are HSBC and Master Card. Woolworths Everyday Money credit card will...
• 7 Things To Watch Out For In A Low Balance Transfer Credit Card
  Most of us would have either seen or heard promotions for 'low interest rate for balance transfers' or 'zero interest rate for balance transfers'....

Topics: Saving Money |

Comments

Name (required)

Mail (will not be published) (required)

Website

« Income Protection Insurance (Disability Income Protection) | Home | File Your Taxes And Get Ready To Claim Your Tax Refund »