A debit card is also called a check card or bank card and it functions like an electronic check. The card is connected to your checking account, and whenever you use it to make payments, your balance is accordingly reduced. This is in contrast to a credit card, where you incur a debt, and need to pay the amount at a future date along with interest.
Advantages
Bank cards have the major advantage of providing you with better control over your finances, as you can spend only what you have in your account. You can plan your budget and control your expenses by keeping a specific balance in your checking account that is connected to the card. Secondly, you will not be incurring any debt as you are using the money that you have. However, you need to check first, the services offered on your card, as certain banks allow a negative balance in your checking account, which is treated as an overdraft and interest will be charged on it. This would make it as good as having a credit card. Comparatively, you need to be more careful with credit cards, as they mostly provide a huge credit, and you can be in serious debt if you do not closely keep track of your spending.
Most bank cards also enable you to make cash withdrawals, whenever you have need for actual cash. However, you will be charged a fee if the debit machine or ATM is out of your bank's network.
Charges
Many banks have now started charging a fixed monthly fee; however, this card remains a better option in terms of convenience and for avoiding excessive spending. You also have the option of switching to a smaller bank, or opening a new account in a bank that does not charge such fees. While working out costs, reward deals on credit cards may seem attractive, but they are reserved for people with good credit rating, and you need very good self-control to keep within your limits. If you get into the habit of paying only the minimum balance, your debt can soon spin out of control, and monthly fees will seem a very small amount at that time.
Risks
Fraud and identity theft is possible on any kind of electronic transaction; however, there is much lesser risk while using a check card. Most transactions are safe, as there is signature verification and only you can use the card. Secondly, even if there is a fraud, you will be losing only the amount you have kept in your account, whereas in the other card you can lose the entire credit limit, and even more.
Handling Risks
It is best to check your bank balance online daily, for ensuring the legitimacy and accuracy of all transactions. If there are any unknown amounts charged, notify the bank immediately, or you can also cancel the card if you have lost it or feel someone is misusing it. Sometimes it is also better to freeze your account, until everything is settled and you have received a new card.
Online transactions are more vulnerable and hence you need to monitor your account more closely when you have used your PIN for a transaction. Make use of all the protective features that your bank is offering on your card. Some banks enable you to set a maximum amount for a purchase, and an email alert is sent when any transaction exceeds the set amount. All such features are helpful in lowering risks and keeping your transactions safe.
Consider all Points before Making a Selection
Before you accept a debit card from any bank, thoroughly read all the terms and conditions, and disclosures. Make sure you understand how your card works, and if there are any transaction charges or monthly fees. Opt for cards that do not provide facility of negative balance, as that will reduce the possibility of excessive spending. Take into consideration all the protective features offered by the bank to keep your transactions safe.
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