Debit Cards 101
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Plastic debit cards look just like credit cards but they are not. Yea, they probably bear a Visa or MasterCard logo, but there is one huge difference! Debit cards work like checks. When you use a card to make a purchase in a store, the money is electronically deducted from your bank account there and then. If you have insufficient funds the transaction does not go through.
No Interest: These electronic payment cards charge no interest because you are not borrowing any money. Cards of this type are growing in popularity, as more and more commercial outlets become more reluctant to accept checks. They can also be used over the telephone and via the Internet to make shopping easier. Think of them as checks and not as credit cards.
ATM access: Usually the debit cards also give access to ATM machines to ease drawing cash twenty four hours per day. Most banks do not charge for ATM withdrawal, providing you use their machine and not those of another bank. If you do that you will be subject to a service charge which can range between $1 and $3,
Stop using credit cards: Credit cards are hugely useful if used properly. Properly you can use them to your advantage and not the issuing bank’s. By all means charge items but be sure you have enough money available to pay the debt off by the deadline marked on the statement. If you don’t, you will pay interest. It is very tempting when you come to pay the statement to let some items roll over. Once you do this it is just as easy to repeat the move at the end of the next month and so on. Lo and behold you find yourself getting deeper and deeper into debt!
Use a debit card: A debit card has most if not all of the benefits of a credit card so use it instead. When you use the card the funds are automatically debited from your bank account, so you can’t get into debt. If you don’t have enough money in your account the transaction is refused. It might be a little embarrassing when that happens, but isn’t that a lot better than finding yourself paying out revolving debt, month in and month out, where you find you end up paying big sums of interest. If you save this money you can use it on yourself and not give it to the banks by way of profit.
Be careful: There are reports that thieves favor debit card theft because in some cases they can empty somebody’s bank account without the owner’s knowledge. Whereas in the case of a credit card there are more checks and balances to stop this happening. Be careful of your debit card, keep it safe and never reveal your password or pin number to anybody else!
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