The debit card is directly attached to a designated bank account. Each time the debit card is used, funds are withdrawn from the bank account. In short, using the debit card for retail transactions is like using cash. The difference lies in the mode of payment.
Advantages of using debit cards
1. Debit cards do not require carrying cash or checks.
2. Obtaining debit cards is a lot easier compared with credit cards.
3. Debit cards are not based on credit score.
4. Assuming the debit card holder is not overdrawn against his bank account, debit cards offer peace of mind knowing that the purchases are already paid.
5. Debit cards are accepted worldwide, both by brick and mortar establishments and online retailers.
6. Interests and penalties for late payments do not apply to debit cards.
Disadvantages of using debit cards
1. Debit cards require constant and diligent monitoring of purchases to avoid overdraft. Remember, overdrafts are penalized.
2. Debit card transactions do not allow grace periods.
3. Compared with credit cards, debit cards offer less protection against fraud.
4. Debit cards are not helpful in building a good credit score.
5. When something goes wrong with the debit card transaction, contesting it is quite difficult.
6. Debit cards have hidden fees and charges, so the card holder should be quick to watch out for them.
Anyone thinking about using the debit card should weigh things out. The list above should be very helpful to help the retailer in making an intelligent decision.