merchant can be charged for each transaction involving a debit purpose, leading to many shops banning their use. A few countries or banking networks charge customers a transaction fee each time they use their debit card. In mostnations, the cards are freely and widely used for all types of transactions. Studies suggest that in Canada, New Zealandand the United States, debit cards have or will soon overtake cash as the most common form of payment.
Types of Debit Card
Debit cards have become more sophisticated since they were first introduced by card issuers. Some cards are linked to bank accounts to allow withdrawals, while others can be used to make store purchases, and some card issuers offercustomers rewards for using their debit cards. In any case, customers need to read the fine print of their cardholderagreements to ensure they understand the many conditions that are usually attached to the use of debit cards.
A check card is a debit card linked to your checking account. It essentially replaces the need for writing checks because itcan be used to make purchases or get cash, and the funds are deducted from your checking account. Some check cardsare referred to as ATM cards because they can only be used to get cash, check your account balances and make depositsto a checking account at an automatic-teller machine. Other check cards have credit-card logos on them, but they're notcredit cards. However, they can be used at store credit-card terminals to make purchases and get cash from yourchecking account. In any case, you should ensure you understand the terms for using a check card because some bankscharge their customers fees for check-card transactions.
Prepaid debit cards also can be used to get cash and make purchases, but they're not linked to a checking account.However, prepaid cards are tied to an account into which a cardholder deposits money, which is known as loading thecard. Cardholders usually go to a participating store or check-cashing business to reload their cards when their fundsrun low. Prepaid cards can come with several fees. For example, Walmart Money Card users generally pay a $3 fee toactivate their cards, $3 to reload their cards and $2 for ATM cash withdrawals.
Some debit-card issuers offer cardholders cash-back rewards. For instance, cardholders might get 1 percent of their cardpurchases credited back to their accounts by issuers. Rewards cards usually come with several conditions, so it'simportant to read the issuer's terms to understand how you can earn rewards. Cardholders usually only get cash back for particular types of purchases, instead of for every purchase they make with their cards.
People sometimes prefer using debit cards to avoid accumulating credit-card debt and paying high interest rates oncredit-card balances. However, the disadvantages of using check cards are revealed by the problems cardholders canface if their cards are stolen. Funds that are stolen from cardholders' checking accounts could leave them short of money to pay bills. Banks will restore money to customers' accounts if they're victims of fraud, but cardholders won't haveaccess to their checking accounts or the cash in them until fraud issues are resolved.