The advantages and disadvantage debit card are one of the reasons why people choose debit cards for financial transactions. Debit cards are an easy, convenient, and fast way to make transactions without having to carry a lot of cash.
Physically, the form of a debit card is almost the same as a credit card. However, they both have different functions and purposes of use. When you use a debit card, the money will be taken directly from your account.
Debit cards are the right choice for those of you who want to save money. With a debit card, you don’t have to worry about monthly bills and interest. Although debit cards have many advantages, there are also disadvantage debit card. Check out the information!
The debit card is linked directly to your bank account. Therefore, you can only make transactions according to the money you have. That means, there is no possibility to make any transactions on credit. All transactions and withdrawals are limited to the available balance in your account.
Doesn’t Increase Credit Score
Debit card transactions are not a form of credit. This means that using a debit card consistently will not increase your credit score. By building your credit score, you will have access to lower interest rates when borrowing and increase your credit limit.
There is a fee
Another drawback of debit cards is that there are fees when transacting at ATMs of other banks. If you use a debit card outside of your bank’s ATM network, you will most likely pay a small fee to withdraw money from your account.
If you request to view balances, transfer money, or make cash withdrawals at ATMs of other and non-bank banks, there may be a fee for each transaction you make. Usually the fee will be directly deducted from your account.
No Reward Points
By earning and utilizing credit card points, you can use credit card rewards to travel and shop for other purchases. However, debit cards usually don’t offer this type of incentive.
Even so, there are also debit cards that offer travel insurance and similar benefits, but the amount you earn through these loyalty programs is usually much less than what credit cards provide.
Limited Transfer Limit
Some banks limit the amount you can spend with a debit card in a 24-hour period. Therefore, you may find it difficult to make large transactions or transfers. For example, to make purchases of very expensive items, such as cars or furniture.
If you want to make a transaction that exceeds the limit, you may need to visit your debit card bank first to complete the transaction. Because if you don’t, your transaction will fail or be rejected.
Understanding the advantages and disadvantage debit card is important. At least you know what card you need most for your financial transactions.