Debits cards are plastic cards used to make payments instead of carrying cash, and unlike credit cards, the money used comes directly from the user’s bank account. Debit cards are the low-cost alternatives to the traditional checking accounts, and they are a proven way that saves hundreds of dollars yearly in full banking and check cashing fees.
These cards operate in the same way like bank accounts, but it incurs little or no fees. It offers an easy-to –use, reloadable and safe to use process which can be utilized at any location that accepts MasterCard and Visa cards and it can virtually pay for everything.
Let’s look at how to use debit cards both efficiently and securely.
What is a Debit Card?
A debit card is also known as check card, and it uses money that is linked directly to your personal or company checking account for any purchases. It’s a convenient and safe alternative to checks, cash, transactions and it usually works for online and in-person purchases. You can use the card at any automated machines (ATMs) anytime you need money. Additionally, you can use debit cards to deposit checks, check out your bank account balances and transfer between interbank accounts. Debit cards also work with different online money transfer apps like Square Cash and PayPal and other mobile payment platforms globally.
Types of Debit Cards: Prepaid Debit Cards vs. Debit Cards
Unlike the standard debit cards, a prepaid debit card requires you to load money first before using it. It does not have a direct link to your checking account; hence, you only use the cash you have loaded onto the prepaid card. A prepaid account lacks some of the major banking solution perks like writing a check or making a wire transfer.
Why Use a Debit Card?
- A debit card gives you the opportunity to move around and do your transaction without carrying any cash. You can exclusively use debit cards in any store globally, and all you need is to swipe the card, enter your PIN and the payment is complete.
- Debit cards use money in your account, so you enjoy debt free payments.
- Debit cards give you cash faster. You can enjoy cash back or even gifts when you use a debit card at stores. Debit cards are versatile enough to provide you with quick services in any automated teller machine in any part of the world.
How to Obtain a Debit Card
Most credit unions and banks offer you a free debit card once you open a checking account, some of the financial institutions might give you an ATM card that works entirely with ATMs. It’s important to ask your bank for a debit card instead of an ATM card. Once the bank gives you the card, activate it using the instructions provided by the bank and then set up your PIN for in-person transactions and ATM. The debit cards should have a yellow metallic square with EMV chip that helps to make your transaction safe.
Understanding Your PIN Number
A PIN number is your debit card’s security code secretively given to you. It’s a personal identification number that you receive from your financial institution once you open an account and get a debit card. Change the bank given PIN number to one that you can remember easily. It is important to keep your PIN number safe to avoid fraud. When you do a transaction with a debit card, your PIN number is the one that will authenticate you as the real owner of your account. The process helps the banking industry to keep off frauds and safeguarding your money.
Important note: Never give your PIN number information to anyone. Remember it. Do not store it near your card or in your wallet.
Debit Cards Fees
Debit card transactions attract some charges. Here are various costs that you should look out for:
- ATM and Foreign transaction fees: These fees occur when you use your debit card in other ATMS or make purchases outside your country of residence. International charges differ from bank to bank, but most of the banking institutions have small fixed costs that range between 1% to around 3% of any transactions. It’s crucial to inform your bank when traveling overseas to avoid inconveniences and to keep your account safe.
- Out-of-network ATM charges: These are costs that occur when you use your debit card in a different bank ATM not connected to your bank’s network. Most of the transaction attracts charges of $2 to around $3 per any transaction performed.
- Debit card replacement fee: In case you lose your card, you will incur some costs to get a new debit card. But most of the financial institutions do not charge anything to reissue a new card after your old one expires.
There is also a one-time fee that can happen if you:
- Overdraft or have non-sufficient funds: Your bank will charge you some fees if you try to withdraw, purchase something or make a payment without sufficient funds in your checking account. If you enjoy banking products like “overdraft protection,” you will repay the overdraft fee plus the amount you owe. If you don’t enjoy overdraft perks, your transaction gets declined and your account charged non-sufficient funds fees.
To avoid the above charges, it’s important that you choose a bank that is near your location. When traveling overseas use a bank that has the same network coverage with your home bank. Always keep your account loaded with cash to avoid non-sufficient fees.
How to Track Your Debit Card Transactions
When you use your debit card either in ATMs, stores or hotels, you get a receipt of the transaction done. It’s important to keep those receipts in a safer place for your account reconciliations. Ask your bank to set a text or an email alert when any transaction happens in your checking account. Some banks usually inform you when your account is below the set amount. Your credit union or bank gives you a monthly statement which you can use to track your transactions. Your checking account statement shows:
- The location you used your debit card, the amount you withdrew and the applicable charges.
- The purchases you made with your card and the amount spent.
- The checks and transfers you did from your account, the beneficiaries, and the amount paid.
Use your statement and your receipts to track your daily spending and to create a budget.
Advantages of Debit Cards
When you use a debit card to perform different transactions, you are using your savings or the money you have in your account.
Here are the main benefits of using a debit card:
- You get your debit card direct from your bank once you have a checking account and they are inter-linked.
- The money you use comes directly from your checking account.
- There is no extra money incurred in interest when you make your payments with debit cards.
- It's easier to move around with a debit card than with cash.
- You don’t build a credit history, making you credit worthy.
- With debit cards, you can easily get money from your checking account from anywhere in the world.
How to Keep Your Debit Card Safe
To protect your debit card from frauds or theft you should:
- Keep your PIN number private, never write your PIN number down, tear it off after memorizing, never let anyone else key the PIN number of you, don’t ever give your PIN number to any company or person even if it is your personal banker.
- Be smart when using your debit card online, some online transactions can be unsafe. Be careful when shopping on online stores that do not have a secure transaction symbol like the little lock logo- the small lock logo located on the lower right –hand corner of any safe store browser window. Log off immediately from the site after your transaction or better clear off the cache.
- In case your debit card goes missing report it immediately to your bank. Additionally, you can request the bank to block your account from accepting any transactions. Ask your financial institution to cancel the old card and give you a new one.
- Keep a sharp eye on your money: Review your account monthly or better sign up for online banking services and get a secure online access to your account anytime and from anywhere. Ask any questions when you see something that might seem unusual in your account immediately.
- Protect your card: If you notice that the magnetic stripes found on the back of your debit card are damaged or it is demagnetized return it to your bank. This is because you cannot buy and swipe when using a demagnetized card. Keep your card away from grits, dirt and magnetic objects that may nick the stripe.
Debit cards offer you an instant banking solution and make your life easier. Debit cards can also be a simple and smart way to help you manage your bills and savings. If you are looking for a lead to open a bank account with a bank that offers debit cards, this is your home. Starting Business offers you assistance on opening a bank account with great banks that also offer debit cards.