Debit card is popularly known as easily accessible plastic cash, which offers electronic access to your savings account in any bank via ATM machines or card swipes. It has functions similar to those of credit cards, with the major difference being the fact that the amount is directly and immediately deducted from the user’s account instead of the money being paid by them at a later date. They have got names like bank cards, cash cards or check cards. With the widespread usage of debit card in the world, a debit card issued from one country is often valid to be used in some other country. Debit cards may also be used for making payments of the purchases made over phone or internet. You can apply for debit card online or offline. Nowadays you might not even need to apply for a debit card to get one, because it is readily offered if you open a new savings account.
The primary four issuers of debit cards around the world are – American Express, Discover Card, Master Card and Visa. Apart from these there are some country specific debit cards popular in those countries along with a few more. To name a few UnionPay in China, RuPay in India and Maestro in the United Kingdom are some of the country specific debit card issuers.
Benefits of Debit Cards
Debit cards in India have a number of variants. They can be majorly classified on the basis of technology used, on the basis of payment platform and on the basis of usage.
I. On the basis of Technology used
II. On the basis of Usage
III. On the basis of Payment platform
Apart from these, debit cards are also allotted the name of metals. For example there are Gold debit cards, Titanium debit cards or Platinum Debit cards. These cards have nothing to do with the metal in particular, but are named so according to the benefits offered to the cardholder. These benefits vary from bank to bank or company to company.
Dos and Don’ts of Debit Card
Fees and charges associated with Debit Card
Although these charges vary from bank to bank, there are a few common charges associated with debit card which most of the banks levy. Here is a list of such charges:
Debit Cards and Credit Cards both look alike bearing a unique 16- digit card number, month and year of expiry and a 3 digit CVV (Card Verification Value) number on the back of the card. While they resemble each other look wise, features of debit card and credit card and their usage pattern varies drastically.
Debit cards on the other hand are directly linked to the bank account of the user. Money for the debit card transactions is directly debited from your bank account which is linked to the debit card . These debits are however subject to maximum wi thdrawal or purchase limit per day decided by the bank.
Credit cards on the other hand are like a line of credit offered by the banks and are linked to a credit card account that features a pre-defined limit. This card is issued by the banks on the basis of eligibility and credit history of the applicant. Once swiped, the bank pays the amount to vendor and the debits are added to the card holder’s account, which, in turn the cardholder needs to pay back to the bank within a stipulated time period.
Credit card actually offers borrowed money which you must pay back in total at the end of your statement period. In case of debit card, it is not permissible for you to use money which is not in your account.
The perks, costs and protections offered by debit cards and credit cards vary according to the bank policies, thus making their suitability for a person vary. Credit cards are known for offering more benefits and rewards as compared to what debit card offers. But credit card is a preferable choice only for people having good financial discipline. For the ones who are more likely to use cards without proper planning for repayment or are impulsive shopaholics, debit card is a better option to prevent them from spending beyond their means.
For any fraudulent transactions, the risk involved in case of debit cards is comparatively lesser. Because in case of debit cards the money in your account is at stake, but in case of credit cards your potential liability is based on your entire credit limit. But it is not the same case always; even a debit card fraud may drain your entire account balance and pose greater harm to your finances.
Most banks offer better than minimum protection at their individual levels for both credit cards and debit cards. Apart from this there are also CARD PROTECTION PLANS offered to ensure quick actions against any sort of fraudulent transactions.
How to prevent Debit Card Frauds
In most cases it is suggested to make frequent use of a debit card tied into a separate account which has limited amount of money meant exclusively for debit transactions.
How to use Debit Card
At POS (Point-of-sale)