What is the advantage of using a debit card?

What is the advantage of using a debit card?

The main advantage of using a debit card is convenience for accessing your money on the go. Other advantages include no interest charges, reduced fees, and incentives like cashback on your purchases. You can pay upfront without having to mess with checks or cash. Plus, you’re protected against theft. 

Debit cards have many advantages over cash and checks.

Luckily for you, I’ll show you the main advantages of using a debit card. I’ll help you decide if using a debit card is right for you.

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What is the Advantage of Using a Debit Card?

The main advantage of using a debit card is the ability to conveniently make purchases without cash or checks. You are not charged interests, receive reduced fees, and may get certain incentives. Debit cards also have some protection against theft.

Let’s take a look at all of the advantages of using a debit card.

1. Convenience

Convenience is a debit card’s main advantage. Debit cards let you pay cash for online and in-store purchases. The money is usually deducted from a checking account. However, you might also have a digital wallet account like PayPal.

These accounts let you purchase a debit card for a fee or send you one for free. It’s another way to access the money in your digital wallet.

Say you run a home-based business and clients prefer to pay via PayPal or a similar service like Payoneer. You can get a debit card that’s tied to that account and income. Once you have it in your hands, you can pay for expenses like groceries and gas.

Plus, you won’t have to wait to transfer the money to a bank account. You can even use the card to pay for utilities online and generate online reports and statements.

2. ATM Withdrawals

Besides paying for purchases with a debit card, you can use it to withdraw money from an ATM. As long as the ATM is within the card issuer’s network, you won’t pay a fee. 

Need $20 for toll roads? No problem!

Some stores also let you get extra cash at the register. You’re good to go as long as there’s enough money to cover the purchase and the cash withdrawal amount. You can pay at the store and get a little extra cash for your pocket.

3. No interest charged

Purchases and withdrawals made with a debit card are not credit-based. This means there must be enough money to cover the transaction amount. In some cases, there must be slightly more.

Rental car companies are an example. If you use your debit card to pay for a rental car, the company will place a hold. That hold might be 20% or $100 over the agreed-upon rental fee. This is in case there are extra or incidental charges for gas or damages. 

Using a debit card is like using cash, there isn’t any interest to charge. You already have the money to cover things.

If that amount doesn’t exist in your checking or digital wallet account, the transaction won’t go through. However, some card issuers may assess an overdraft fee. Contact your bank or read your cardholder agreement for overdraft policies.

4. Avoid Debt

That brings up the next advantage of a debit card. Unlike a credit card, you won’t go into debt. You’re simply spending money you’ve earned or have stored in an account. It can be income from an employer or clients. That money could also be from investments and interest payments.

Debit cards also let you track and categorize what you spend your money on. Some banks will automatically categorize purchases for you. However, you can manually modify them within your online dashboard.

See within minutes whether you’re close to your budget on household items or groceries. You can make plans to cut back on takeout, morning coffees, or entertainment. By getting a visual of where your money is going, you can also know whether you have extra for vacations.

5. Reduced or No Fees

Most debit card issuers do not charge a fee. However, banks and card issuers may charge monthly maintenance fees. Still, these are usually well below what you pay to use a credit card.

Let’s say you have a debit card tied to a digital wallet account. The card issuer charges a monthly maintenance fee between $1 and $3. If you use the card five or more times a month, your fee is $1. Anything less than five transactions and the fee goes up to $3.

However, many banks and card issuers do not charge fees under certain circumstances. For instance, you open a checking and a savings account with one bank. You maintain a minimum daily balance between the two accounts to eliminate fees.

6. Incentives and Other Perks

Using a debit card can also come with some neat perks. For example, you could earn extra cash with every transaction. Some digital wallet card issuers pay 1% additional cash on every transaction.

So, if you spend $1,000 with your debit card each month, you’ll get $10 back. That money goes directly into your digital wallet. You can transfer that money to a savings account or use it to pay for future purchases. 

This is a great way to earn or save money without thinking about it. Other perks include discounts on certain purchases. For example, cards may offer 5% off at coffee chains or pet stores.

Another possibility is earning cash rewards you can apply to other accounts, like a mortgage. You might make enough for an extra payment towards the principal balance each year.

7. Theft Protection

If you’ve ever had your wallet stolen, you know everything in there is usually gone. That includes identification, cash, and cards. You can shut off debit and credit cards pretty quickly. You won’t be liable for fraudulent transactions as long as you report them.

However, any cash you have in there is literally up for grabs. There’s almost a 100% chance you’re not getting that money back. You can avoid this by paying for everything with a debit card.

There won’t be any need to carry cash around. You’ll avoid the heartache and financial implications of losing income. With a debit card, you’ll have an electronic trail and can help cut down on identity theft.

8. Less Time at the Register

Ever been behind someone who’s paying by check? We all know how this can slow things down. The person has to write out and sign the check. Then, the cashier has to ask for identification and validate the check.

More than a few minutes have gone by when the person pays and leaves. With a debit card, you don’t have to be the source of others’ frustration. Insert your card and PIN within seconds.

Plus, you won’t have to worry about whether the establishment takes checks. Many businesses are no longer taking checks. Besides taking up so much time, it’s easier to commit fraud. A debit card instantly takes money from an account rather than taking a few days to clear. 

Summary: What is the advantage of using a debit card?

So, what is the advantage of using a debit card? The most significant benefit is convenience. It’s easier to pay for purchases outright. And you don’t have to worry about going into debt.

You won’t be as tempted to overspend or stray from your budget with a debit card. You won’t have to pay any fees to use your card in most cases. And you won’t rack up interest charges like a credit card.


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John is the founder of TightFist Finance and an expert in the field of personal finance. John has studied personal finance for over 10 years and has used his knowledge to pay down debt, grow his investment portfolio, and launch a financial based business. He is committed to sharing content related to personal finance based on his experience in his career, investing, and path towards reaching financial independence.