Learn The Debit Card Benefits You Never Knew Existed
3. Faster payments indicate more excellent budgeting.
Debit cards, in addition to holding you accountable for responsible spending, make it easier to stick to a budget and avoid overspending. If you issue a paper check, it may take days or weeks to be cashed. Meanwhile, if you do not complete daily account reconciliation, you may spend more than you have.
Payments made with debit cards are speedier and, in some instances, instantaneous, indicating how much money you have remaining. Debit cards work well with online and mobile banking and budgeting apps and websites because you can view your current balance and account activity in plain and white.
4. There is no interest to pay.
The most compelling argument for using a debit card rather than a credit card is to avoid paying interest. Credit cards are renowned for charging exorbitant interest rates that fluctuate due to fluctuations in the Prime Rate.
Annual percentage rates on credit cards range from 10% to 32.99% (If you incur a penalty interest rate due to late payments). If you are not rigorous about paying the bill off every month, using credit cards will usually cost you financially. When you pay using a debit card, you avoid paying expensive interest charges, which can dramatically raise the initial transaction cost.
5. Security
If your wallet has ever been taken, you know the money is gone for good. Because no one can use your card at an ATM unless they know your PIN, debit cards help prevent identity theft. The recent inclusion of chips in debit cards increases security. Some debit cards also offer online purchasing security, allowing you to purchase exclusively with your card.
6. Debit cards are linked to interest-bearing accounts.
Many banks provide a variety of checking and savings accounts, including interest-bearing accounts. A minimum daily amount is usually required, but you gain the benefit of collecting interest and the convenience of utilizing a debit card for cash withdrawals and transactions in exchange. Compounded monthly interest is free money that is added to your account balance and is accessible via debit card.
7. Financial and commercial incentives
Have you heard of incentive credit cards? Some debit cards are now involved in the rewards game. Points can be earned for every dollar spent and redeemed for vacation, shopping, or gift cards. Typically, rewards are granted for transactions made with your signature rather than your PIN.
The procedure is the same as for credit cards, but there is no annual fee, no interest charges, and all of the other debit card perks we’ve already discussed. On the other hand, merchants prefer debit card transactions, particularly the PIN input version, because they pay banks less per swipe than credit card transactions. As a result, some merchants prefer debit card payments, particularly those requiring a PIN.
8. Fee reductions for credit card tax payments
When paying federal taxes, using a debit card rather than a credit card can save you money on “convenience costs.” All three of the IRS’s payment processors levy a fixed fee of $2.25-$3.95 for debit card payments.
The fee for credit card payments ranges from 1.87% to 2.00% of the entire payment, with a minimum price that equals the debit card flat fee. In this case, you’d pay at least the same fees if you used a credit card, but you could spend much more. For example, a taxpayer who owes $2250 in taxes on tax day would pay an additional $45 plus a 2% fee.
