Gone are those days when carrying paper money around was essential to make purchases. With the godspeed pace of technological advancements, plastic money took the reins and now it’s either online transactions or cards, and well in some cases cash that actually matters. Well, we’ve all come across a debit card or perhaps are in possession of one. But, what is a debit card or bank card and how does it all work? What are its features and what makes it different from a credit card or an ATM card? Read this article to get a glimpse of it all.
What Is A Debit Card?
A debit card is a type of payment that allows you to make safe and simple transactions online and in-person by withdrawing funds straight from your bank account. You are not borrowing from a credit line, as you would with a credit card; the amount on your card is yours. You may also use one to withdraw cash from ATMs.
How To Get A Debit Card?
- Step 1 – Open a bank account
When you create a bank account with a financial institution, you usually get a free bank card. Follow the procedure to activate it and set up your PIN for ATM use and transactions.
- Step 2 – Consider getting a prepaid debit card
If you do not have any access to a bank account, a prepaid debit card, that also enables users to make purchases, is an option.
- Step 3 – Look out for related products and services
A secured credit card could be a better option for you if you want to improve your credit. If you are unable to obtain a normal checking account, consider opening a second chance bank account.
Debit Card Vs Credit Card
Now that we’re aware of what is a debit card, let’s look at what differentiates it –
Debit cards allow users to pay right away since they remove funds immediately from their checking account for transactions or ATM withdrawals.
Credit cards allow you to make purchases and pay for them later. You are effectively borrowing money from the credit card company with the intention of repaying it at the conclusion of your statement period.
Debit Card Vs ATM Card
A standard ATM card is used only for withdrawing cash from a machine, unlike a debit card, which may be used to make purchases as well as draw cash from an ATM.
The only exception is if the ATM card bears the Visa or MasterCard logo, in which case it acts as a regular bank card and withdraws money from your bank account immediately.
Advantages & Disadvantages
If you know what is a debit card and are aware of its uses, it’ll help you make informed decisions when it comes to making purchases or withdrawing money. Here are some of the advantages and disadvantages that you must be aware of.
- Using a bank card allows you to maintain control over your finances. You can only spend what you have, so excessive interest rates and strangling monthly balances won’t be an issue.
- Because all of your transactions and withdrawals appear on a single bank statement, a bank card can help you simplify your finances.
- To acquire a debit card, while you need to know what is meant by a debit card, it is not necessary for you to have good credit as such.
- Debit cards offer the ease of plastic without the debt that comes with credit cards.
- Because debit card usage isn’t notified to the credit bureaus, it won’t help you build or improve your credit.
- When you try to make a substantial purchase or withdraw money from an ATM, your debit card’s daily expenditure and withdrawal restrictions may be exceeded, causing it to be refused.
- Bank card rewards schemes are often less comprehensive than credit card rewards programmes.
- Some retailers, such as petrol stations, are well aware of what is a debit card and understand the fund limits. To make sure that they do not face fraud, they put a temporary hold on your account funds to ensure you have enough funds to pay for your transaction. These restraints are normally lifted after 48 hours.
Are Debit Cards Safe?
Knowing what is a debit card isn’t enough, learning about the safety measures is important too. Because debit cards are directly linked to your bank account, the potential of being a victim of fraud is a common concern. On the other hand, banks have anti-fraud safeguards in place to keep your card and account safe.
Bank-issued cards now include an integrated chip that significantly minimises the danger of fraud. If you have to enter your card rather than swipe it, you know your merchant’s card readers are chip-enabled. PINs and security codes also aid with account security.
Things To Keep In Mind
- To make transactions, debit cards minimize the need to carry cash or physical checks, and they may also be used to withdraw cash from ATMs.
- Debit cards normally have daily purchase restrictions, so it’s unlikely that you’ll be able to make a very significant purchase with one.
- Purchases made with a bank card may often be made with or without a personal identification number (PIN).
- If you use your card to withdraw cash from an ATM that isn’t linked with the bank that issued your card, you may be charged an ATM transaction fee.
- Some debit cards provide reward schemes that are comparable to those offered by credit cards, such as 1% back on all transactions.
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