Debit cards, along with credit cards, are the most widely used mode of payment in today’s paperless culture. Somewhat surprisingly, some people still find using them a bit confusing. To understand what a debit card is, and how to use it, is very simple. This guide explains the relevance and usage of debit cards in modern-day banking and finance. Read on to know more.
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What Is A Debit Card, Anyway?
A debit card meaning is a plastic card issued by the bank in which you have a savings/current bank account, that allows you to withdraw money when you are in need of cash by not having to visit the branch. All you need to do is go to the nearby ATM machine with your card, swipe it there, choose your preferred language, follow instructions given by the machine, enter your 4-digit PIN followed by the amount you need and withdraw, provided the entered amount is available in your bank account. As soon as you withdraw cash, the amount gets deducted from your bank account.
Credit cards also work similarly, just that the bank lends you money on credit. After buying something and paying for it through your credit card, you get a monthly bill on which you make a payment.
Every bank issues its account holders debit cards and manages the transactions made by them through an electronic payment system. When an account holder swipes their debit card, the bank is contacted by the terminal requesting authorisation. The request is only approved by the bank provided the account holder has maintained adequate balance.
Debit Card Features And Benefits: How They Can Make Your Life Easier
Debit cards include various features and advantages that can simplify your life. Here are a few significant features and benefits of using a debit card:
Cashless Transactions Using Debit Cards Are Convenient
Making payments without cash is one of the biggest benefits of a debit card. You may simply purchase at local shops, eateries, and buy from internet merchants without carrying cash when you have a debit card.
Account Management Is Made Simple With Online And Mobile Banking
The option to connect your debit card to your online and mobile banking accounts is yet another significant benefit. This makes managing your finances easier.
Keeping Your Money Safe And Secure
Debit cards also include several security and safety features to secure your money. Majority of debit cards demand entering a PIN for each transaction, preventing fraud and unlawful transactions. Every debit card has a unique CVV code on the back that helps proves the user’s identity when making online transactions.
Getting More For Your Money With Reward Offers
Many debit cards offer reward systems through which you get cashback, savings, or other benefits. These rewards could build up over time and allow you to make cheaper purchases. Fuel discounts, grocery rebates, and reward points that could be used to purchase items are a few examples of well-known rewards programs.
The Great Debate: Debit Vs. Credit – Which One Is Right For You?
Confused between a credit card and a debit card? It is time to conclude the discussion surrounding this venerable issue baffling us. You can choose the ideal card through the below-given differences between debit and credit cards.
As mentioned above, debit cards only facilitate transactions when you have the amount you intend to spend available in your bank account. Credit cards allow you to make purchases on credit, which the bank issuing you the card determines after carefully checking your income and credit history. The flip side of using a debit card is that unavailable balance will deny the transaction, whereas the benefit is that you are never tempted to spend beyond your capacity, something a credit card tempts you with.
Credit cards provide additional financial freedom and incentive schemes, such as cashbacks or travel points. They may also assist you in raising your credit score, which is crucial when making loan or mortgage applications. Carelessness might put you in huge debt.
Debit Card Fees And Charges: How To Avoid Them And Save Money
It might seem like you are continuously losing money just by using your card due to charges like yearly maintenance costs and ATM withdrawal fees. Stop worrying. We have listed all the possible fees and charges that you should know, with a few tips on avoiding them.
Regular Fees And Charges
● Fees for ATM withdrawals
● Annual maintenance charges
● Transaction fees
● International transaction fees
● Overdraft fees (If you spend more than you have in your account, you could incur this one)
Tips & Tricks For Minimising Debit Card Fees
● Pick a bank with reasonable fees. Some banks provide debit cards with minimal fees and charges.
● Research and find a bank that suits your needs and budget.
● Use the ATMs owned by your own bank. Choose a debit card with no fees. Many banks offer debit cards without annual maintenance or transaction fees.
● Don’t forget your account balance. If you have an activated overdraft facility, make sure you always have sufficient balance to avoid incurring overdraft penalties.
● Prepare for overseas travel by acquiring a debit card made especially for those travelling abroad.
Debit Decisions: How To Choose Wisely
Multiple choices could leave you feeling dizzy. Below is a simplified process to help make wise debit card decisions:
Assess Your Needs
Choosing a debit card requires you to first determine your needs. Do you require a card for regular purchases or merely in an emergency? Do you prefer a card that allows zero balance account bank? Do you intend to purchase a premium card with yearly fees?
Study Your Options
Now that you know better, start your research. Look at the many banks and financial organisations that provide debit cards. Pay close attention to items like overdraft fees, ATM fees, and international transaction costs.
Draw Comparisons
Once your research is complete, it is time to compare your options. List the cards that fit your requirements. Compare them side by side. Examine the costs, perks, and incentives that each card provides. Think about the bank’s standing and customer support. See if it is a zero balance account bank, as this feature is very useful in the long run.
Take Your Budget Into Account
Keep your budget in hand when choosing a debit card. Consider each card’s costs to see whether the advantages outweigh them. Look for cards with no yearly fees and minimal transaction costs if money is limited. Be prepared to spend extra if you want a premium card.
Conclusion
Debit cards are a crucial part of modern personal finance management. They come with a number of features and advantages, such as rewards programs, account management, safety and security, and convenience. To minimise unforeseen expenses, use a debit card appropriate for your spending style and pay attention to fees.
Debit cards and their meaning can occasionally be puzzling, but the information shared in this piece will make it easier for you to use debit cards. You can successfully navigate the banking and financial world.
