Using Debit Cards - Pros and Cons
Avoid Personal Debt and Use a Visa Delta, Solo or Maestro Card
Jun 25, 2009
Most bank or checking accounts come with a debit card. A Visa Delta, Solo or Maestro Card is often preferred to a credit card by the more frugal person. The avoidance of personal debt leaves a consumer feeling more in control of family finances.
Advantages of Debit Cards
- Avoid Personal debt. Provided that a checking account doesn't have an overdraft facility, using a debit card can help a consumer to avoid personal debt.
- Improved budgeting. Consumers find budgeting a lot easier because they feel more financially accountable for their transactions.
- Chip-and-PIN security. Like credit cards, chip-and-PIN security in built-in to the card to help protect a consumer against unauthorised usage.
- Convenience. A Visa Delta, Solo or Maestro Card is more convenient than paying in cash.
- Interest payments. Consumers use their own money which means that they don't pay interest each month, unless they use their overdraft.
- Personal safety. It is safer to carry a debit card than a large sum of cash.
Disadvantages of Debit Cards
- Unauthorised overdrafts. It is still easy to spend money that isn't available. This means that the unwitting borrower pays a high rate of interest - possibly higher than on credit card debt - not to mention further administrative charges.
- Returns. A return from a retailer is more difficult as a debit card is treated as if paying in cash. This could mean that a consumer receives store credit instead of a refund.
- Debit card fees. Many financial institutions charge a fee for each transaction. Some even charge for using chip-and-PIN instead of using a signature.
- Hotel bookings. It is not usually possible to guarantee a hotel room without a credit card. This could also be the case with car rentals.
- Emergency situations. Whilst a debit card can help a consumer to avoid personal debt, borrowing money is sometimes a necessary evil. A credit card can help with short-term financial emergencies when alternative funds are depleted.
- Reward points. A customer does not earn reward points for making purchases.
A debit card, such as a Visa Delta, Solo or Maestro Card, helps a consumer to avoid personal debt. There is also chip-and-PIN protection to help combat card fraud. Beware of debit card fees. There are instances when credit cards can prove useful, such as booking a hotel room or an emergency situation when funds are depleted.
Sources
(May 1, 2006). "Debit cards." The Boston Globe.
Disclaimer: This article in no way attempts to give legal or tax advice. One should consult a licensed attorney, tax advisor, or other qualified professional.
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