As the name suggests a debit card will deduct money directly from your account each time you use it. A debit card reduces the use of cash. Just like credit card you can also make purchases using a debit card. Now most of the debit cards can also be used as ATM card.
A debit card cannot be used to obtain credit and therefore it avoids expensive purchases.
With a debit card you can make purchases only that are affordable to you. By using debit card you need not be worried about making regular payments, fines and interest rates.
Thus debit card is more convenient when compared to a credit card.
Credit Cards Vs Debit Cards
Compared to credit card the major advantage of using a debit card is that the transaction will be cancelled if you don’t have enough money on your account. Debit card will not charge any interest as like credit card. Normally the interest rate charged for credit cards will be between 9-20%. Debit cards will not carry this risk. The other most advantage of a debit card is that it is easy to obtain. Unlike credit cards you need not have to show any personal identification or information during transaction.
Online cards and offline cards
There are normally two types of debit cards- online cards and offline cards. Online debit cards are enhanced ATM cards which perform similar to ATM cards. Here the money will be electronically transferred from the holder’s bank account to merchant’s account.
In order to access at a store terminal, you have to enter the PIN, just like in the ATM. The system will verify whether you have enough money to cover the transaction.
Offline credit card is similar to a credit card. The terminal of the merchant reads your card and instead of crediting it, it debits. Here the amount will not be deducted immediately from your account. The amount will be normally debited with in 2-3 days.
The major draw back of using a debit card is that it is less secure than a credit card as it is directly linked with your account. A debit is like a blank cheque. Any unauthorized person can take money from your account quickly. So you have to be careful while using a debit card. Before you choose your debit card, understand the policies and charges while using at ATMs of other banks. While choosing your debit card try to understand the terms and conditions regarding theft or unauthorized use. If you lost your card try to report as soon as possible. Never give your PIN to any other person. Don’t choose any PIN that is very easy to remember just like your telephone number. Take the receipt along with you after the purchase has been made with a debit card.
