Debit cards are becoming popular nowadays because of the negative publicity that debts are giving credit cards. Anyone who intends to make wise financial choices are encouraged to give up the latter for the bad spending habits that it promotes. It allows consumers to purchase items that they cannot afford at the moment. By relying on a future income that may or may not come, they are risking a future filled with debt obligations. Instead of enjoying the fruits of their labor, they have to send it to creditors for products that may have already lost their appeal.
Apart from the ability to buy things without waiting to save up for it, another appeal of credit cards is the safety of not bringing cash. Well if this is the major appeal for you, debit cards can serve that purpose very well.
Debit cards allows you to purchase items without having to carry cash. But unlike the other type of card, you need to put money in it before you can swipe it. In essence, you stock the card with cash before it can be used for any purchase. If you run out of money in your debit card, it becomes worthless until you put more funds in it.
Another benefit of these cards involve reward points. Most stores offer debit cards to loyal patrons to encourage them to make constant purchases. These are coupled with reward points that consumers can redeem later on.
While all of these are appealing, one question remains to be answered: will debit cards help you stay debt free?
The answer to that is yes. You can say that it will keep you from acquiring debt. That is a given fact because you cannot spend more than what is currently on your account. Unlike credit cards, you are actually using money that you have at the moment. You may not be handing over physical cash, but you are spending cash that you own already - just stored in a safe place. That in itself, is one way to implement a cash only purchase without endangering actual money from being snatched from you.
Debit cards also allow the elimination of any fees and interest rate for every purchase that you make. There are fees when using a debit card but this is usually shouldered by merchants and retailers. This is also a great option for people who do not have their own bank accounts (unbanked) or those who have limited access to traditional banking services (underbanked).
While all of these are beneficial, you need to consider if debit cards actually teach us proper financial management skills. In most cases, they do. It is true that parting from actual cash is more difficult and this make you think twice about spending it. This may not be as strong as spending through debit cards but the bottom line is they help you live within your means. As mentioned, you only spend the amount that is on your account.
You just have to be careful about the debit card that you will use because there may be hidden charges that you do not know of. Read through the fine prints to understand if there are fees every time to deposit money, check your balance and so on. Some cards charge a monthly service fee. While the combination of these costs may not be as significant as a credit card, you should be aware of them nevertheless. Make sure your account is FDIC insured to protect the money you will place there.
Apart from the ability to buy things without waiting to save up for it, another appeal of credit cards is the safety of not bringing cash. Well if this is the major appeal for you, debit cards can serve that purpose very well.
Debit cards allows you to purchase items without having to carry cash. But unlike the other type of card, you need to put money in it before you can swipe it. In essence, you stock the card with cash before it can be used for any purchase. If you run out of money in your debit card, it becomes worthless until you put more funds in it.
Another benefit of these cards involve reward points. Most stores offer debit cards to loyal patrons to encourage them to make constant purchases. These are coupled with reward points that consumers can redeem later on.
While all of these are appealing, one question remains to be answered: will debit cards help you stay debt free?
The answer to that is yes. You can say that it will keep you from acquiring debt. That is a given fact because you cannot spend more than what is currently on your account. Unlike credit cards, you are actually using money that you have at the moment. You may not be handing over physical cash, but you are spending cash that you own already - just stored in a safe place. That in itself, is one way to implement a cash only purchase without endangering actual money from being snatched from you.
Debit cards also allow the elimination of any fees and interest rate for every purchase that you make. There are fees when using a debit card but this is usually shouldered by merchants and retailers. This is also a great option for people who do not have their own bank accounts (unbanked) or those who have limited access to traditional banking services (underbanked).
While all of these are beneficial, you need to consider if debit cards actually teach us proper financial management skills. In most cases, they do. It is true that parting from actual cash is more difficult and this make you think twice about spending it. This may not be as strong as spending through debit cards but the bottom line is they help you live within your means. As mentioned, you only spend the amount that is on your account.
You just have to be careful about the debit card that you will use because there may be hidden charges that you do not know of. Read through the fine prints to understand if there are fees every time to deposit money, check your balance and so on. Some cards charge a monthly service fee. While the combination of these costs may not be as significant as a credit card, you should be aware of them nevertheless. Make sure your account is FDIC insured to protect the money you will place there.
RSS Feed