11
Dec
2011

Debit card

There are many different forms of debit cards available, many with their own specific attractions and drawbacks. If you are looking for a new debit card, there are few different options you need to take into consideration to ensure you find the debit card that best fits your needs.

Things To Consider

  • Determine if your bank provides debit cards. This is often the most convenient, as all of your money would automatically be connected to the debit card.
  • Decide if you want a prepaid debit card. These prepaid debit cards have a set spending limit and once the money is used up, the card is no longer accepted.
  • Compare the features among various financial institution that offer prepaid debit cards . Chances are that you will find at least one or two that are providing a free card design that best fit your needs.
  • Itemize the fees that are associated with each prepaid debit card. Some require you to pay an initiation fee in order to start using the card. Others may only charge you a small fee for the actual card. Pay attention to the fees that come with ATM withdrawals, monthly service charges, reloading fees and other miscellaneous fees that may be associated. Cards may also charge you a fee to check your balance at an ATM.
  • Look into the protection that each prepaid debit card is offering you. These types of cards usually have lower protection in comparison to credit card companies and bank accounts. This is especially important if you were to ever lose your card or have it stolen; you may not be able to recover your funds. Some companies require you to report the stolen card within a certain amount of time. If you have not reported the incident within the time frame specified, you may be liable for a larger amount of the money that was stolen.
  • Check to see if there are any rewards with the debit card

There are benefits of using debit card from the financial planning perspective:

Peace of mind. This card electronically transfers funds from your bank account to the store you are making a purchase from. This can eliminate the need to carry cash. You do not need to worry about losing cash or misplacing it in a pair of jeans only to find it two months later.

Convenience. You don’t need to make a trip to the bank every time you need to withdrawal money. You can use your card just about any where you go, and if you need the cash you can access your money at an ATM machine any time of day or night.

Protect yourself from yourself. Unlike credit card, debit cards can instill financial discipline to the cardholder. With a debit card, all your purchases and expenses are directly deducted from your checking account. So, your expenditures are always limited to what the money in your checking account can cover. You might get broke after an uncontrolled spending habit by using the future money from a credit card, and expected to pay the debts and the neck breaking interest months after you make that mistake.

Control your finance. With a debit card you must keep accurate records. You must record each transaction so that you will know what your account balance is at all times. With this in mind, you are able to understand your cash flow scenerio from time to time.

Easier qualification: Since debit cards use your own money, not your credit, they’re often easier to get than credit cards. Parent can always extend it to their children especially those are still studying in College or University.

Rewards programs. Many cards offer rewards for using the card (the rewards work just like a credit card). Over time, it is possible to earn enough reward points to purchase airfare and other products

Example:

  1. Up to 5% cashback on every day retail spend
  2. No minimum spend required
  3. Automatic cash back into your account

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