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Pros and Cons of Debit Cards
April 27, 2018
Debit cards are a relatively new invention. It all started in 1966, when the Bank of Delaware piloted the program. In the 70s and 80s, more and more banks jumped on board. Now, fast forward from your parents’ teen and early adult years to your own and debit cards are ubiquitous with living in general. Don’t get me wrong. Cash is still king, but debit card transactions have definitely become a staple in the American consumer diet. While they were a great invention, there are pros and cons to their use.
Convenience is one of the biggest pros when it comes to debit cards. If you want to stop and get a burger with your friends, you don’t need to worry about having the right amount of cash in your wallet. Also, debit card transactions are faster than a credit card or writing a check because there is less verification involved.
Debit cards force you to stay within budget, which means you are far less likely to overspend. If you have another account, you can link them for automatic transfers. Make sure to note the money transferred out of the other account because it isn’t an unending supply either. Plus, if you do need cash, it’s a lot easier to go to the ATM to make a withdrawal than it is to find a credit union.
Last, but definitely not least, they are easier to get than a credit card. To get a debit card, you just need an appropriate credit union account. To get a credit card, you need to fill out an application, which requires waiting for their approval based on your credit history. Most also require you to be at least 18 years old.
Now the cons, the potential for overdrafts is very possible, if you don’t watch your account. Some merchants don’t process the payments immediately. If you continue to spend, you could end up in the hole. Even worse, the credit union may possibly charge fees of $25-40 to cover those payments for you. Do you want your $4 latte to now cost $30? No latte is that good.
Lastly, a debit card is much harder to dispute charges or cases of fraud. It may mean you are out of the money, if someone makes a purchase using your debit card. They also don’t affect your credit score and a credit score is necessary to someday get a car loan, a house or even a credit card.
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