Debit Card Accounts

2007-10-15 12:53:47

( Financial )



Definition of a Debit Card

Checkbooks are cumbersome to carry around when buying goods, and checks can get easily damaged or lost in transit from the payee to the bank clearing house. Hence, the debit card was developed for the purpose of replacing personal or business checks as payment for transactions.

A debit card looks a lot like a credit card, with embossed account name and number. It also has a magnetic strip which the merchant can swipe after entering the amount of the payment. Instead of signing a draft as in the case of a credit card transaction, you simply enter your pin code on a card reader or terminal, and get a receipt of the transaction from the merchant. Visa, as well as other major card companies, also offer Visa debit cards aside from the usual credit card facilities.

Unlike a credit card which enters your transaction amount into a statement which will be billed to you later, a debit card can access your deposit account directly and take out the money immediately from your account balance.

Benefits of a Debit Card Account

Debit cards are widely accepted even by merchants who normally do not honor credit purchases. This is because the transaction and processing costs involved in accessing a customer's debit card account are much less than for credit card claims.

With a debit card account, you don't need to bring your checkbook each time you shop. Instead, you just present your debit card to be swiped and keep the debit slip for future reference.

As long as you have a copy of the debit transaction slip, you will be able to keep track of your debit card account balances. This enables you to be more disciplined in your spending, in order not to overdraw your debit card account.

Using a debit card also lets you avoid using credit cards and even encourages credit card debt elimination. Hence, you will not be tempted to spend more than necessary, and be able to manage your liabilities better.

Precautions in Using Debit Cards

Unlike credit cards, debit cards don't have high-level security features. Some cards don't even need your signature. Merchants are usually more laxed about accepting your debit card without asking for additional identification, provided that you have enough balance in your debit card account to pay for the item, and that you have inputed the correct PIN code at the point of sale.

All you really need for a debit card transaction is your PIN code, so be careful about how you input it. Protect your PIN code and never allow anyone to see or know it. Better yet, get a debit card account which requires you to sign a debit card transaction slip to authenticate the purchase.

Always keep a tab on your debit card transactions, and always check the balances after using the debit card. Reconcile your bank statement with your checkbook records regularly as well.


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