What are the benefits of a Debit Card?

By Dana McDonald - StockMonkeys Member

One of the best things about using a debit card is that you are using your own money. This means that you don't have to apply for credit, you are not using credit, and you don't have to pay anyone back. While this is the primary benefit there are many other good reasons for having a debit card.

No debt

Using a debit card for purchases means it is much more difficult to get into debt. While it's still possible to be an irresponsible spender, you are not using credit that will have to be paid back. If you are unable to pay back what you owe on a credit card, you will be charged interest, meaning that your debt continues to grow. This can lead to a debt spiral that is difficult to get out of.

Everything is online

With many debit cards, you will be able to apply online. When the account is open, you will usually have online access to your account, making it easy to keep track of everything that is going into and coming out of your account. You can also use your debit cards to make purchases and pay bills online as well.

Convenience of a credit card

You can use your debit card in all the places that credit cards are accepted. This means you can use it online, over the phone and in-store, but with the knowledge that you are not spending money you don't have.

Great for people who are not good with credit

If you tend to overspend or you are just not good with credit, then a debit card may be the perfect option. By only spending your own money, making purchases with a debit card is much more manageable.

Can be used for cash withdrawals

If you make cash withdrawals with a credit card you will usually be charged a fee, and the money you take out will be charged at around 22% p.a. interest. Using a debit card, you can withdrawal your own money from an ATM, with little or no fees.

Can be used for smaller purchases

Debit cards are being increasingly used for smaller payments under $10. The 'tap and go' feature is also becoming more popular, where you can tap your card against the terminal for payments under $100 for quick payment.