Debit cards are simply plastic cards that banks issue to their customers. For some people, it is easier to use than credit cards and a big amount of cash, especially for those students who have no the ability of money management. But before you are ready to switch to debit cards from other financial transactions tools, it is really necessary to get familiar with the advantages and disadvantages of debit cards.

3 Advantages of Debit Cards

As we all know, the conveniences from credit cards have often blinded people from the serious dangers of using them. However, compared with credit cards, debit cards can instill financial discipline that credit cards, in most cases, destroy. With a debit card, all your purchases and expenses are directly deducted from your checking account. So, your expenditures are always limited to what the money in your checking account can cover.

Secondly, debit cards bring you all the conveniences that come with a credit card. You can use your debit card anywhere a credit card is accepted, with very reasonable fees – no fees in most cases, and no interest to worry about months later. Although debit cards too have some disadvantages like, you might get really broke after an uncontrolled spending and the fact that debit card cannot rebuild your credit, if you have a damaged credit already.

If you often use a debit card abroad, then you could also find it helpful to save money. Since you can pay per transaction you could be less likely to fritter away loose change or spare notes in a bid to get rid of your excess holiday money. Using your card means you are paying for the cost of the item you want to buy and the cost of that item alone. No change. No mess. No fuss. In certain countries it is considered customary to leave your change for the sales person or waitress. Again, with a card this isn’t the case and you can choose at your leisure – and budget – whether tipping is something you would like to do.

3 Disadvantages of Debit Cards

It is obvious that debit cards are not like credit cards that you could use in paying for whatever you would like to purchase even if you don’t have enough money in your account to pay for it. Regular plastic lets you pay for something using other people’s money and then paying for it at a later time. A prepaid card, often mistaken as a debit card is different from each other. The may seem the same because you’re spending your money at every swipe. The major difference is that a prepaid credit card does not require you to have a bank account while a debit card does.

If you are going out for vacation, debit card purchases are taken out of your account right away. If you make a reservation and for some reason you cannot travel, with a debit card chances are great that you won’t be able to get the money back into your account. With a credit card there again is the dispute options.

Besides, you should know that debit cards are not yet capable of completely replacing cash. You would still need to keep some cash on hand for emergency purposes only. Although a lot of establishments accept cards for as a payment method, there are still a lot of establishments that have not adapted to this.

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