Debit cards or bank cards are cards that come with your checking accounts. You can use them as credit cards if they contain a Visa or MasterCard logo on them. They don’t incur fees like a credit card does because the amount of money in the account is backing them up. With that said, are bank cards as good a choice as they seem?
When you open a checking account you will receive debit cards, if you choose to do so. They work like a credit card but without the fees and penalties that go along with failure to pay or late payments. They make it easier for you to buy items in stores or restaurants.
Debit Cards Pros
Bank cards teach you to manage money again when you have had trouble in the past with credit cards. They come complete with a safety net because you have a checking account with a set amount of funds. Checks and cash are out-of-the-way in favor of the “new plastic”.
Now that we know how a debit card works, here is a word of warning. The card is a smart choice if you handle them with care. However, pitfalls do exist and you can fall victim if you are not careful.
Since the card works with an associated checking account, they need a computer program that records transactions. Together with the ATM they really do seem like a genie in a box. You put a card in and push some numbers and money spits out at you.
Debit Cards Cons
If you are not careful your checking account can become overdrawn without ever bouncing a check. What’s more, ATM receipts can be deceiving, because they don’t always show the true current balance in the account if other transactions haven’t cleared the bank.
Bank cards are also subject to “blocking” just like a credit card. This means that some merchants can block off a set amount of money in the account until you complete your transaction with them.
Case in point: using a bank card to pay for a $20 visit to the gas station, but the store blocks off $50 on the card. If you choose the extra $30 for something else, you will run into problems until they remove that block.
Overall, debit cards are a good choice if managing money is a problem. But, learn to use them wisely or you could run into trouble with your checking account balance.