![]() ![]() ![]() If your account balance goes below $0, many banks will charge your account $30-$60 in fees for having to correct your balance. If you use your checking account for auto draft bill paying and make lots of purchases in a short amount of time, for example, you could accidentally overdraw your account. Overdraft fees occur when you spend or lose more money than you have. The largest drawback comes from untimely overdraft fees. While using a debit card you gain no added value for each purchase other than helping you not to overspend. ![]() While many major credit cards offer cash back, miles, or additional rewards for using them, debit cards typically are just like using cash. Because of the lack of risk, there is also very little credit score reward. Because debit cards are not lines of credit, consumers will not build any credit while using the cards. Drawbacks To Debit Cardsĭebit cards aren’t all good, however. With no annual fee to have a card, debit cards also prevent any real risk while maintaining a way to purchase goods quickly without an abundance of on-hand cash. For example, if a purchase is made using a debit card that wasn’t made by you, you can freeze your debit card and call your bank to dispute any charges. Debit Cards are the best natural deterrent to avoiding any outstanding consumer debt.īecause debit cards are usually issued by your bank or whoever holds your accounts, there are certain fraud protections that come with the cards as well. If your account is at $100, and you’re trying to purchase $200 in goods, your card will simply be declined. Due to the nature of debit cards, you cannot pay for items you do not currently have the money to afford. The benefits of a debit card are very straightforward. In addition to standard debit cards, there are prepaid debit cards that allow you to access a prepaid amount of money. Typically, debit cards refer to bank cards that act as ways to extract money from someone’s personal checking or savings accounts. Starting with the simpler of the two cards, debit cards are extensions of a set amount of money. The goal of this Money Chat is to help you understand what credit cards and debit cards are, how they are different, what the benefits and drawbacks of each are, and how you can best use them to succeed. Since their inception, millions of Americans have lifted themselves out of financial hardship by building a workable credit score with credit cards while, unfortunately, many have fallen under the trap of insurmountable debt by not understanding the limits of what credit cards can offer. Credit and debit cards have been staples of the American economy since the mid-1980s. ![]()
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