Debit card is a convenient transaction tool and it serves the purpose of helping you to purchase or pay something. Debit card is linked with your money account. Debit cards allow you to perform money transfers across the Internet quickly. Unlike credit cards, debit cards are less risky, because you are not allowed to borrow money. Credit cards are notorious for their high interest rates and they have caused so much financial issues among people. However, debit cards can be very risky as well; if you are not being responsible with the way you use them. If your debit card is linked to your primary savings account, there’s a bigger chance for you to overspend. Depleting your savings accounts can be quite destructive as well.
A good way to reduce your risks is by setting up a dedicated account for your debit card. Some banks allow you to set up a weekly or monthly allowance. It will be much safer, if your debit cards are not connected to your primary bank account and you are allowed to spend only a specific amount. This makes debit cards more ideal for teenagers. Parents can control how much money that their children can spend for a period of time. Debit cards can be topped up every week or month automatically. Parents can teach their teenage children financial responsibility by doing this. Debit cards are ideal for travellers as well. Bringing debit cards is much safer than carrying a wad of cash in your bag. Once you lose it, you can call the bank
In some cases, you can also use debit cards as gifts or for payroll. So, debit cards can be more versatile than regular credit cards, because they can be loaded with prepaid balance. For travellers, it is a good idea to choose multi-currency debit cards. It means that when you are doing transactions, the money will be automatically converted into the local currency. This is more convenient that exchanging your cash in money exchange services. If your card is used for regular, everyday shopping, make sure that it’s not linked to your primary account. This will prevent you from overspending your balance, which can be as destructive as overspending with your credit card.
Watch out for any fee related to the debit card. Some debit card providers may apply fees for each transaction. The fee may seem negligible, but if you are making more than a dozen of transactions each day, you may end up spending a lot of money annually. Also, make sure that you can block the card instantly after you find out that it has been stolen or lost. If you choose non-personalized pre-paid credit cards as gifts, make sure that they are anonymous. If your name appears on the card, it can be immediately traced to you, which will be risky financially. The card should also have expiration date and a clear procedure for replacement. When you plan to replace your card, make sure that the fees are not excessive.