Prime Rate Credit

Debit cards are one of the fastest growing forms of payment in this country. Convenience is probably the biggest reason for their popularity. Some of the advantages of a debit card are they are easier than carrying cash. Sometimes you can even get debit cards that reward you with airline miles, or work like gas credit cards where you can earn free gas, so that’s another potential advantage.

There is no interest payment accrued for using a debit card since they directly draw the funds from your checking account. You also benefit from using a debit card by not having to write a check and you can request cash back at stores when making a purchase.

There are also some disadvantages to using a debit card instead of cash or a credit card. With a debit card, you are not building your credit as it is a direct draw from your bank account. Usually, when using a debit card, you won’t get some of the rewards offered with the usage of a credit card. Debit cards usually don’t have extra added services like credit cards do such as extended warranties on purchases.

Another disadvantage of using a debit card is the problem of not keeping track of your spending as you are less likely to immediately write each purchase in a ledger book. If you overdraw your account, it can cost you up to $34.00 per bounced item.

To try to avoid this problem, keep a specific amount in your account at all times as a cushion. Try, for example, for $500.00 in the account above what you think you are spending to stay away from overdrafts. Save all of your receipts and go online to see immediately what your balance is.

If you have a problem with a purchase, you can not stop payment with the use of a debit card. The merchant already has your money so you have less leverage if there is a dispute. With a credit card, you have a float time before you have to pay your bill so you can leave your money in the bank earning interest.

With the debit card, your money is deducted immediately. Fraud protection is not as good for a debit card as it is with a credit card. If a credit card is lost or stolen, you usually pay the first $50.00. If a debit card is lost or stolen, you are responsible for up to $500.00. A debit card is like a blank check so a thief can quickly empty your bank account.

Report it immediately if your card is stolen as a thief can shop online or order items over the phone with just your name and the account number. A debit card is useful in our fast paced society but just be cautious about the possible disadvantages.