Using debit card more responsibly

Tuesday, 05 February 2013 09:02 TIAMIYU ADIO ISMAIL

Debit cards are issued by banks and, in most cases, look and spend exactly like a credit card. The only difference is that the debit card does not advance you any credit. In fact, using a debit card is much like writing a check without the paper.

Any amount you spend is deducted directly from your checking account virtually immediately, depending on how the transaction is actually processed. There is no bill to pay at the end of the month, no accumulating interest charges and no membership fees.

If you do not have the funds to cover the transaction the debit card will return a denied transaction. Banks often place a limit on the size of any single transaction that may be processed in any given day ranging from N500 to N150,000 here in Nigeria. If you know you need money in excess of your limit you have to enter the bank for that. Normally their operation lasts for 24 hours only.

Always know how much money you have in your account, and review bank statements carefully. Don’t forget that your debit card may allow you to access money that you have set aside to cover a check that has not yet cleared your bank.

Using debit cards to regain control of your financial future is a convenient way to impose a self-discipline on your spending. The beauty of the debit card is that you may only spend what you have. The debit card allows you to make no claim on future cash, rather, it limits you to spending what is currently in your checking account. Impulse buying is curbed. As you work to learn the discipline of budgeting and spending, the debit card places important restraints on your ability to overspend. Debit cards offer you the convenience of credit cards but on a pay-as-you-go basis. You always know where you stand and you have no outrageous finance charges that eat into your ability to pay down your debt.

Debit cards also provide users with the added convenience of not having to carry extra cash or a checkbook around. The debit card is an adequate substitute for both with the added benefit that the card is protected by a PIN. If lost or stolen, the debit card is harder to use than a checkbook and, unlike cash, is not gone forever.

Finally, Debit cards, unfortunately, have a few disadvantages that you should be aware of. For one thing, if you don’t faithfully record your transactions you can easily cause your bank balance to fall out of control. For the most part, this disadvantage is countered by the ability to access your account balance 24/7 on the internet. You should also request your balance any time you withdraw funds from an ATM or you requested for your transaction alert on your mobile phone from your bank.