Debit Card is a way to make purchases in place of cash and as technology is advancing very rapidly, It’s better to use Plastic money instead of paper money. There are various types of cards available in the market issued by financial institutions to their consumer, but most importantly, two are known as Debit Cards and Credit Cards. We will discuss debit cards in detail here in this blog.
Debit cards are the cards used by the consumer with his savings account which means the consumer must have a saving account with that bank to have a debit card. It is issued to corporate entities also against their current accounts in the bank. While swiping Debit cards at the POS terminal, money gets deducted from the deposit account instantly. Hence, a consumer can’t go into debt i.e consumer can purchase only up to the amount he holds in his savings account. Let us understand what savings and Current accounts are in the bank first.
Different types of Bank Accounts
Generally, every bank offers two types of bank accounts to all of its customers which are saving accounts and current accounts. Both these accounts have their own facilities associated with them and limitations. Being a customer you can not open both accounts as the opening of these accounts has some pre-requirements which must be fulfilled by the customer.
A saving account is a deposit account that permits limited transactions and is most suitable for people who are salaried employees or those who are getting regular income. Savings accounts earn interest at a rate of around 4% per year (ROI is subject to change quarterly). You have to maintain a minimum balance in the savings account but the balance required is usually very low.
Current Account is meant for daily transactions, and it is best suited for business personnel who perform transactions through their accounts more frequently. You will not get any interest over the amount deposited in the current account and the minimum balance required in the Current account is much higher compared to the savings account.
An overdraft facility is one in which individuals can withdraw more money from the account than it actually has in accounts, and this facility is offered only with a Current Account and not with a savings account.
Types of Debit Cards:
There are different types of debit cards available in the market and every bank offers them to their customers. Types of cards depend on the type of platform used for payment linked to the card.
Visa and Visa Electron Debit Cards
It is the most used and popular debit card for online and other payments connected with the International visa payment system. The transaction is secured by a verified visa platform system. This card also has an overdraft facility. There are different types of Visa cards like Platinum visas etc. Visa electron cards are the types of Visa cards but no overdraft facility is attached to them for the customers.
Mastercard or Maestro card
It is a widely used card and the cardholder can access funds across the globe via MasterCard’s secure platform. You will find that some cards have Mastero written over them while some have Mastercard. Both cards are issued by Mastercard and the key difference is that Maestro is available only as a debit card, whereas Mastercards can be issued as a debit, credit, or prepaid card.
Contactless Debit Card
Using this card, payment can be made just by tapping or wave of the card on the POS terminal so making payment safer as it is based on Near Field Communication Technology (NFC).
What is NFC (Near Field Communication) :
It is a short-range wireless connectivity standard that uses magnetic field induction to enable communication between devices when they’re touched together, or brought within 4 centimeters of each other.
RuPay Debit cards
It is a Domestic card issued by NPCI and payment is accessed by National Financial Switch Network. The name, derived from the words ‘Rupee and ‘Payment’, emphasizes that it is India’s very own initiative for Card payments. RuPay is a product of NPCI, the umbrella organization that powers retail payments in the country. It is recommended to go for domestic cards if you want to have one, as it will further strengthen the economy.
Advantages of Debit Cards
- Can be used as ATM cards for transactions at ATMs
- In Addition, can do Online transactions and can swipe at PoS terminals
- It requires 4 digit PIN to complete transactions
- It is linked to the saving or the current account of the customer so a real-time deduction of money from the account
- No credit facility exists on debit cards
- It removes the need to carry cash while shopping as it can be easily swiped for the purpose.
- Debit cards come with a daily transaction limit, above that limit, a consumer can not purchase.
- Debit Card offers lucrative reward programs for shopping with a card against its use limit.
- Any transaction made using Debit Cards can be easily tracked as it reflects in the account statement of the holder, but this is not possible in the case of Cash transactions.
- Purchase using Debit Cards is normally cheaper than the usage of Credit Cards for the same purposes.
- It is issued free by the bank against a savings/current account.
Safety guidelines for the usage of Debit Card
- Please keep your PIN and don’t disclose it to anyone
- Don’t disclose PIN and other info to bank personnel as well because they will not ask for it and if someone is asking by posing self as a bank representative that means you are talking to a fraudster so be aware
- Don’t leave the ATM counter if your transaction is not complete and press cancel every time
- Use ATM privately
- Break the card and dispose of it, when not in use
- Keep changing your PIN from time to time
- Register for SMS/Email Alerts
Details printed on the Debit Card
- 16/19 Digit Unique card number which is different from your bank account number.
- Name of Card Holder imprinted on the card itself.
- Month and year of issue and expiry of debit card.
- Logo of the issuing bank and card provider company both.
- A magnetic strip on the rear side.
- Space for the signature of the customer.
- CVV is 3 digit number printed just adjacent to the magnetic strip end and it is an extra security feature added to your debit card by the service provider. You have to enter this CVV number each time making online transactions.
Customer service Helpline number.
Debit cards have no annual fees and also can be easily procured from the bank. But Debit cards have some limitations as compared to the Credit cards such as less protection, no cashback, fewer reward points, no credit score maintenance, etc, and finally, debit cards are more prone to online fraud. Also once any fraud is detected with the Debit Card, money gets deducted from the consumer account instantly while in the case of a Credit Card you have some time in hand to react and lodge a complaint about fraud.
Debit card v/s ATM card
There is a difference between ATM Cards and Debit Cards as ATM cards have only one feature that can be used to withdraw cash from ATM Machines, while the Debit card can be used for withdrawal as well as Swiping purposes. A debit card can be a good step towards your goal of personal finance because here by using plastic money you can track back your transactions easily which is not possible with cash transactions.