Debit Cards - A Smart Choice?
submitted: Aug 14th 2008 |
by: WilliamBlake |
Total views: 3 |
Word Count: 511 |
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Connected to checking accounts, debit cards are used as if they were credit cards, bearing the logos of Visa or MasterCard. Debit cards, however, are not charged any type of fee since they only use the money available in the bank account they are attached to. Debit cards seem like a good choice, but considering the details will help you decide for sure.
Debit cards are issued when a checking account is opened if the customer elects to do so. Debit cards give the illusion of a credit card, without the fees and penalties that go along with failure to pay or late payments. They make it easier to purchase items in stores or restaurants. We've all seen those commercials where everyone in the shop pays with plastic and things run smoothly. Then, that one person comes along that puts a monkey wrench in the machine with a handful of cash.
If an individual has had difficulties using credit cards responsibly, debit cards can help them learn to handle their finances better. Instead of carrying checks or cash, debit cards are heralded as the new plastic money. Since they can only draw from the funds already present in a checking account, they are considered to be safe too.
Now that we know how a debit card functions, here is a word of warning. Debit cards are a smart choice if they are handled with care. Pitfalls do exist and a debit card user can fall victim if they are not careful.
Since they are tied to a checking account, transactions need to be recorded in a ledger or a computer program. The enemy of the debit card is the ATM machine. It really does seem like a genie in a box. You put a card in and push some numbers and money spits out at you.
Just as quickly as that money was deposited in your account it can disappear if you are not careful. The checking account can become overdrawn without ever bouncing a check. ATM receipts can be deceiving, because they don't always reflect the true current balance in the account if other transactions haven't cleared the bank.
Debit 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 your transaction with them is processed. Case in point: using a debit card to pay for a $20 visit to the gas station, but the store blocks off $50 on the card. If the extra $30 was earmarked for something else, you will run into problems until that block is removed.
If you are able to handle your money well and make responsible choices when it comes to spending, a debit card can be great tool. The misuse of these cards, however, can cause problems, including a checking account with a balance that dips down into the red.
About the Author
Debt consolidation can help you pay off debt faster but it's not the best choice for everyone. Learn more about whether you should consider consolidating your debt on the Inside Debt Consolidation website at http://www.insidedebtconsolidation.com
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