Debit cards have become very popular and for good reason. They’re convenient, widely accepted and allow you to pay upfront for purchases.
When you use this card to make a purchase, the funds are drawn from your bank account. This will usually be a checking account but some savings accounts and even money-market accounts now offer these cards.
This form of payment is much more convenient than writing a check. Also personal information such as your address and phone number are listed on checks but not on these cards. This makes them a much less intrusive way to pay.
You can also set up recurring payments for things like utilities or phone service with them. This saves a lot of time each month by not writing checks and there’s no chance of the payment being late.
When you make a purchase at a retail location, you will usually have the option to get cash back. And most of these cards can be used at Automated Teller Machines or ATMs as well.
In the United States, most debit cards have either the Visa or MasterCard logo. They can usually be used anywhere credit cards are accepted.
When you use your card to make a purchase, you will usually be asked to enter a Personal Identification Number or PIN. This is a four digit code you set up with your bank when you open an account or order a card.
Sometimes the purchase will require a signature like a credit card. However, whether a PIN or signature is required, the money you spend using a debit card will come from your account.
It’s important to keep track of the balance in the account that is linked to the card to avoid going over the limit. Banks will charge fees for this and if it happens too often they will close your account.
Keeping track of this is easy to do if you set up your account with online banking. Simply go online and record purchases in your account register often. This encourages healthy spending habits by keeping you aware of where your money is going.
The major difference between debit and credit cards is with one you are spending money you have and with the other you are spending money that is borrowed. It’s easier to spend money with a credit card knowing you won’t have to pay until the end of the billing cycle. Even then, you’re not required to pay the full balance, just the minimum monthly payment.
This can be a trap if you’re not careful. You could get stuck with high interest rates and those minimum monthly payments can really add up fast. It’s easy to lose control if you get in the habit of spending money without a clear plan to pay it off each month.
I’m not saying credit cards are bad. In fact some offer good reward programs and if used responsibly will increase your credit score.
However, I always recommend starting with a debit card and get used to spending within your means. When you’re comfortable with that, then you can apply for a credit card with a rewards program that fits your lifestyle. Spend wisely and pay off the balance each month.
You may find that you enjoy not receiving a credit card statement with a big balance each month and choose to continue using your debit card. Either way, if you spend responsibly you will find that you have a lot less financial stress.From Debit Cards to Banking Information