The pros and cons of using a debit card
Debit cards are useful in a lot of ways. For instance, a payday loan can be deposited into your bank account within hours of your online loan application being approved. It’s your money, spend it how you wish, whether it’s a cash withdrawal, personal check, or debit card. The recession has seen more people using debit cards than credit cards. While most are already familiar with the convenience of using plastic to pay for items or services, some may not realize the pros and cons of using a debit card, specifically.
Debit card Pros:
Debit cards can hamper impulse spending. They can’t eliminate this problem, but their use can curb it to some extent. Unlike with credit cards, debit cards will only cover purchases when money is available to do so in the bank. In short, a debit card is just like cash and that money is automatically debited, or deducted, from your account after each transaction. Credit card spending has limits, and installment payments to pay off charges. A debit card does not offer this luxury. This means most people will think a bit more before spending more cash than they should and skewing their budget.
Merchants that don’t accept personal checks are more inclined to take debit cards for transactions. This makes using debit cards as convenient as a credit card at the point of sale. Debit cards can be referred to as Visa check cards, and have the Visa logo, and others have the MasterCard logo. This means that wherever MasterCard or Visa is accepted, debit cards with the logo is accepted there as well.
The cons of using a debit card
Unlike what is offered with most major credit cards, cash advances or a line of credit is not offered to debit card holders. Therefore, when emergency cash is needed or when fast cash is needed to help a person survive until their next paycheck, a debit card is of no help. However, a person in this situation, even with bad credit, may be able to consider a loan till payday or a cash advance from a company offering personal loans.
Debit cards do not enjoy the protection of federal regulations that credit card customers enjoy. This means that in a dispute over charges, the consumer has little recourse once money has been debited from their account.
Also, banks that issue debit cards with checking accounts sometimes charge a fee when cards are used. This practice is becoming obsolete, but consumers should check with their bank before using debt cards and accruing fees. Be sure to ask about using the card to get cash from other banks or ATM machines. Some don’t impose fees on transactions, but it’s common for banks to charge when a card is used at another bank or a private ATM machine.
A lost or stolen debit card can also be very costly depending upon what state you reside in and the time that the card is reported missing. Limited protection is usually offered, but people should be aware of security services that are available. If someone doesn’t report their card missing within 48 hours of its going missing, it’s possible for the card holder to be left with liability for purchases or withdrawals made with the card. The liability depends on the bank’s policies and state laws governing such limits.
There are advantages to debit cards, like easy and fast access to cash advance or personal loan deposits, the drawbacks can be costly if a person isn’t careful. Overall, however, they offer freedom from high interest rates while offering many of the same conveniences as a credit card. Debit cards do not help build a person’s credit, but they also do not present the risk of creating bad credit like some may have a tendency to do while using a credit card.