Debit cards are gaining popularity these days, primarily due to the recession. People are trying to make wiser choices on spending as there is a constant worry on losing existing jobs. The changing interest rates of credit cards have also pushed more people into using debit cards instead. With these cards, cash is drawn out from the card holder’s account as compared to credit cards where money is borrowed and repaid with large interest rates. Using credit cards is compared to spending money that you do not really have.
The first card was first issued in the late 1970s by the First National Bank. They were given to quality account holders that had good credit and were similar to a guarantee card. Several years later, the initial debit system was implemented, utilizing the existing credit card and ATM systems. With the emergence of newer advancements in technology, debit card expenses were directly subtracted from a checking account. The Mastercard, Visa or Plus symbols are seen on these cards. Over time, debit cards have outnumbered the use of checks and are frequently used to pay for food and other smaller transactions.
The use of debit cards is a step towards a more paperless transaction system. These cards offer several advantages over other modes of payment. Debit cards are safer to carry when traveling in comparison to cash and checks. Cardholders can control their spending because there is a limited amount of cash in their accounts. Debit cards can be used like a credit card online to make purchases but you won’t be charged any interest fees. In contrast to credit cards, people can easily apply for a credit card even if they have bad credit. There are number of options available in applying for a card, the most common of which is applying for a checking account which also offers cards. Some banks give the debit card on site or it can be mailed to the account holder’s address.You will need to activate the card through your ATM or your bank. Prepaid debit cards are re-loadable versions of the debit card can be applied for through PayPal or purchasing through Western Union. Transaction fees may be charged. You can have a part of your salary deposited to a debit card. An initial fee is commonly charged upon the mailing of the card and can also carry a number of usage fees.
In comparison to credit cards, debit cards are known to have less security. If a card is stolen, be sure to report it immediately to avoid any unwanted charges. If reported within 48 hours of being stolen, a charge of up to $50 may be incurred. For notifications of beyond two days but less than 60 can incur larger fees. Beyond the 60 day limit, larger fees may be charged.Any suspicious items on your financial statement must also be reported immediately. It is also advised to keep all receipts made with the use of a debit card. The account holder’s information can be easily obtained through looking at a receipt which may in turn be used to illegally purchase services or goods. If the card comes with a PIN, it is best to memorize it. Avoid using birthdays as your PIN. Always keep track of your purchases and the amount remaining in your account. Some debit cards allow the account holder to use money reserved for other uses, such as clearing other debits.