2/1 | Using debit cards instead of credit cards
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. Money is then yours to spend via a cash withdrawal, personal checks, or your debit card. During this recession, many have begun using the latter more and more instead of making credit card purchases. 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.
The pros of using a debit card:
Debit cards can hamper impulse spending. While they cannot completely eliminate this problem, their use does a lot to curtail it. Unlike with credit cards, debit cards will only cover purchases when money is available to do so in the bank. A debit card is tied to cash, in that money is deducted (or debited) from your account after the transaction. This is unlike credit card spending, which allows a certain spending limit followed by installment payments to pay for charges later. A debt card lacks this feature. As a result, for most people, this means thinking twice before spending cash that will severely skew their budget.
Merchants who do not accept personal checks are more inclined to accept a debit card for payment of an item or service. This makes using debit cards as convenient as a credit card at the point of sale. Today, many debit cards are referred to as Visa check cards and bear the Visa logo while others bear 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. A person in this situation, even with bad credit, could look into a loan till payday or cash advance from a personal loan company.
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. While this practice is becoming more and more obsolete, consumers are advised to check with their individual bank before using debit cards and accruing possible fees. Be sure to ask about using the card to get cash from other banks or ATM machines. While some may not charge fees on purchases, it is still very common for banks to charge when a card is used at another institution or at a privately owned 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 amount of liability, of course, depends upon the bank’s policies and the state laws governing any 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 don’t help you build credit, but they also don’t have the risk of damaging credit as credit cards do.