The Pros and Cons of Using Debit Cards
With credit becoming much harder to come by in our current economic climate, many consumers are turning to debit cards as an alternative to credit cards. Credit cards and debit cards have both similarities and differences, advantages and disadvantages. Let’s take a look at the pros and cons of using a debit card.
Debit Card Advantages
Debit cards offer no credit but are linked directly to a checking or savings account that you set up at your local bank. Think of them as a convenient alternative to cash. You can use your debit card to pay for goods and services without writing a check or carrying cash. You can access cash at any ATM. You can also use debit cards to pay for shopping online or placing an order over the phone. They are widely accepted and function in that regard very similarly to credit cards.
Debit cards are a great way to stay within a predetermined budget. Remember, with debit cards you cannot spend more than what you have in your linked bank account. There are no interest charges because you are using your own money and most banks will not charge you a fee for using a debit card. Many banks do offer overdraft protection and if you exceed your spending limit they will cover the overage to a certain limit and charge a fee to cover the over charge.
Debit Card Disadvantages
Credit cards are superior to debit cards in some regards because unlike debit cards, credit cards offer you protection from fraud and unauthorized use. Banks will also offer you limited protection on unauthorized use of debit cards but it can be quite a hassle to have your bank account dwindle while the bank investigates the problem. Credit cards also allow you to dispute charges and will act as your advocate. You can also earn rewards and discounts using a credit card.
Federal law mandates that credit card companies must protect you on a disputed charge. There is no such mandate for debit cards. Another advantage of credit cards over debit cards is that in case of emergencies you can use the line of credit you have with your credit card issuer. Once again, with a debit card you are limited to the cash you have in your account and that’s it.
So that’s pretty much the gist of it. Like most things in life there are advantages and disadvantages… and debit cards are no exception. It’s basically a matter of what works best for you. I personally carry a debit card and a credit card.
Related Information:
- Important Facts About Debit Cards Find out what a lot of people don't know about debit cards....
- Stores Report Shoppers Preference for Cash and Debit Cards More and more shoppers are now turning to cash and debit cards as opposed to using credit cards....
- Credit Cards vs. Debit Cards vs. Charge Cards A quick and clean explanation of the differences between credit cards, debit cards and charge cards....
- Debit Cards May Be Next on the Reform Agenda See what Congress has in mind for reforming the way debit cards are handled by the issuers....