Using a debit card instead of a credit card

The pros and cons of using a debit card

Debit cards are useful in a lot of ways. For instance, a payday loan can be deposited into your bank account within hours of your online loan application being approved. It’s your money, spend it how you wish, whether it’s a cash withdrawal, personal check, or debit card. The recession has seen more people using debit cards than credit cards. Some are already familiar with the convenience of plastic, but may not know the pros and cons of debit cards.

Pros of debit cards

Debit cards can hamper impulse spending. They can’t eliminate this problem, but their use can curb it to some extent. Debit cards, unlike credit cards, will only cover purchases if the money to cover it is in the bank. A debit card is tied to cash, in that money is deducted (or debited) from your account after the transaction. Credit card spending has limits, and installment payments to pay off charges. A debit card does not offer this luxury. As a result, for most people, this means thinking twice before spending cash that will severely skew their budget.

Merchants who do not accept personal checks are more inclined to accept a debit card for payment of an item or service. This makes using debit cards as convenient as a credit card at the point of sale. Debit cards can be referred to as Visa check cards, and have the Visa logo, and others have the MasterCard logo. This means that wherever MasterCard or Visa is accepted, debit cards with the logo are accepted there as well.

The cons of using a debit card

Unlike what is offered with most major credit cards, cash advances or a line of credit is not offered to debit card holders. Therefore, when emergency cash is needed or when fast cash is needed to help a person survive until their next paycheck, a debit card is of no help. A person in this situation, even with bad credit, could look into a loan till payday or cash advance from a personal loan company.

Debit cards do not enjoy the protection of federal regulations that credit card customers enjoy. Once the money is debited from the account, contesting charges gets more and more difficult.

Banks that issue debit cards with checking account sometimes assess fees when the cards are used. While this practice is becoming more and more obsolete, consumers are advised to check with their individual bank before using debit cards and accruing possible fees. Be sure to ask about using the card to get cash from other banks or ATM machines. While some may not charge fees on purchases, it is still very common for banks to charge when a card is used at another institution or at a privately owned ATM machine.
A lost or stolen debit card can also be very costly depending upon what state you reside in and the time that the card is reported missing. While very limited protection may be offered, consumers should be aware of their level of protection ahead of time. For instance, if someone does not report their card missing within 48 hours of a thief taking it, it is possible for the original card holder to be left with some or all of the liability on purchases and cash withdrawals made by the thief. The amount of liability, of course, depends upon the bank's policies and the state laws governing any such limits.

While debit cards definitely come with advantages, such as providing immediate access to cash advance or personal loan deposits, the drawbacks involved with using them can be costly if a person is not very careful. They do not, however, have high interest rates and are just as convenient as credit cards. Debit cards don’t help you build credit, but they also don’t have the risk of damaging credit as credit cards do.