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DEBIT card is a plastic card that may be used for purchasing goods and services or for obtaining cash advances for which payment is made from existing funds in a bank account. Because a debit card provides about the same float as a checking account,it is a less desirable method of payment than a credit card. These card are often part of the comprehensive all-in-one accounts offered by many brokers .
DEFINITIONS OF DEBIT CARD
An electronic card issued by a bank which allows bank clients access to their accounts to withdraw cash or pay for goods and services. This removes the need for bank clients to go to the bank to remove cash from their account as they can now just go to an ATM or pay electronically at merchant locations. This type of card, as a form of payment, also removes the need for cheques as the debit card.
History Of The Debit Card
The debit card has been around since 1966, which means banks have had a lot of time to figure out new ways to charge you for using your own money.
The first debit card may have hit the market as early as 1966, according to a report by the Kansas City Federal Reserve (pdf). The Bank of Delaware piloted the card. And by the '70s, several other banks were trying out similar ideas. Robert Manning, author of Credit Card Nation, said debit card usage picked up in the '80s and '90s as more and more ATMs started cropping up across the country. In 1990, debit cards were used in about 300 million transactions. In 2009, prepaid and debit cards were used in 37.6 billion transactions.
Debit card fees aren't actually new. Wells Fargo has been issuing debit cards since 1990, and spokesperson Lisa Westermann said the company charged $1 a month to use debit cards in some regions as recently as a few years ago.
CHARACTERSTICS OF DEBIT CARD
It is a combination of a cheque and ATM card. Therefore there is no fees for using the ATM for cash withdrawal or as a debit card for purchase.
Its service is meant for withdrawals against the balance already available in the designated account.
It is the card holder’s obligation to maintain sufficient balance in the designated account to meet withdrawals and services charges.
No credit period is required to get a debit card.
No credit period our bank account is debited immediately.
Spending is limited to our bank balances.
ADVANTAGES OF DEBIT CARD
Debit cards are a convenient alternative to cash. They are easy to carry and can be handled easily.
Debit cards can be used to withdraw cash from an ATM and also for merchant transactions at point of sale terminals.
Debit card encourages the habit of responsible spending since the card holder can only utilise their own money within account and it also helps in better budgeting and money managing since the transactions are recorded.
A debit card offers a greater safety and thus decreases the frauds and theft.
DISADVANTAGES OF DEBIT CARD
You may incur bank fees like annual or something even monthly service charges, or something dropping past your minimum acceptable balance.
If you are used to getting user rewards, forget them as they aren’t applicable with debit cards.
It is very hard to resolve disputed charges because unless you own a PIN-based direct debit card, whoever knows your PIN can use the card
Instant money means instant risk: If someone got a hold of your debit card, they would be able to take money directly from your bank account. With a credit card, the charges are much easier to dispute, and they do not interfere with your direct lines of income the way that debit cards do.