Advantages of Cash Debit Cards
Doug Smith

Defined Tag: Cash Debit Cards.

There are many advantages to cash debit cards, if you understand how they work. They look like credit cards, and are used the same way. However, whenever debit cards are used, the money is immediately withdrawn from the account holder's checking account. When a credit card is used, the amount of the transaction is added to the existing balance, and interest rates will be charged if the entire balance is not paid at the end of the month. The debit style of cash card has no interest rates, but is limited only by the amount of money in the cardholder's checking account.

A debit card is a standard benefit of opening a checking account. It contains an embossed account number, an expiration date, a CVV code on the back, and a magnetic strip just like the major credit cards do. It may even sport the logo of one of the major credit card vendors, such as Visa, Discover, or MasterCard. The major difference, however, is that the debit card is like an electronic check. Every time it is used, the purchase price is transferred from the card holder's checking account to the merchant's bank account.

Even though it is much handier and easier to use than a checkbook, the debits charged on the card should still be entered into the checkbook, because that's where the money is withdrawn. If the receipts are not kept, the checking balance can be verified at any automatic teller machine. There may be a fee if the debit card is used at the ATM of a competing bank, but you can still get the information or cash you need.

These cash cards are sometimes too convenient. It is easy to overspend your checking account balance by using the card for all financial transactions. That's why it is important to record the purchases in the check register, or you can get the balance printed on your receipt each time you use the debit cash card at an ATM. If you travel or have lots of business expenses, ask if your employer has a company credit card you can use. If you use your debit card for plane tickets and rental cars, those costs are deducted immediately from your bank account! It is very easy to become overdrawn this way, so be careful when using debits for business expenses.

Check cards are very convenient and flexible. It is important to record your expenses and/or frequently check your balance. That is the best way to take maximum advantage of the benefits of your own cash debit cards.

Copyright 2008 by Doug Smith. All Rights Reserved Worldwide. Unauthorized Duplication Prohibited.