Using debit cards to regain control of your financial future is a convenient way to impose a self-discipline on your spending. The beauty of the debit card is that you may only spend what you have. The debit card allows you to make no claim on future dollars, rather, it limits you to spending what is currently in your checking account. Impulse buying is curbed. As you work to learn the discipline of budgeting and spending, the debit card places important restraints on your ability to overspend. Debit cards offer you the convenience of credit cards but on a pay-as-you-go basis. You always know where you stand and you have no outrageous finance charges that eat into your ability to pay down your debt. Debit cards also provide users with the added convenience of not having to carry extra cash or a checkbook around.

Debit cards, unfortunately, have a few disadvantages that you should be aware of. For one thing, if you don’t faithfully record your transactions you can easily cause your bank balance to plunge out of control. For the most part, this disadvantage is countered by the ability to access your account balance 24/7 on the internet. You should also request your balance any time you withdraw funds from an ATM. While no interest is charged, often there are heavy use fees associated with a debit card. If, for example, you use a foreign ATM (one not owned by your bank) the bank that owns the ATM may charge a fee of up to $3.00. Often your own bank charges a fee for ATM withdrawals from a foreign ATM as well that match the fee charged by the ATM owner. You could pay up to $6.00 to withdraw a minimum of, say, $20.00. That is a high price to pay for having access to your own funds. You may avoid all fees by only using an ATM owned by your own bank.

Finally, the bank debit card provides no help with credit repair. If you have had credit problems in the past and you are working to rebuild your credit through the responsible use of credit, only the responsible use of a credit card will help. Because the bank issuing the debit card is not issuing credit they do not report transactions to the credit bureaus. There are other solutions that act much like a debit card, for example, a secured credit card, that will help with credit repair. The point is, if you have had credit problems, please do not be misled by the claims of getting a debit card to rebuild your credit.

Now, the lines are blurring between the two forms of payment-debit or credit-for both merchants and consumers. When someone pulls out a plastic card with the MasterCard or Visa logo on it to pay for food, gas, or a store purchase, he or she myprepaidbalance  may conduct the transaction using a signature, or in the case of a debit card, by entering a PIN number on a check out keypad. The signature payment method runs on a credit card network. The PIN payment method runs on a debit network. Merchants pay a fee in either case (to MasterCard or Visa) as part of their doing business.

The real difference between credit cards and debit cards has more to do with the funds being transferred. When you buy something with a credit card, you are not spending your own money but rather borrowing money against a credit line that the bank issuing the card has extended to you. The only limit on your spending is the limit imposed by the credit card company. So, when you make a payment towards your outstanding balance you are paying back the credit card company for earlier purchases This fee is slightly lower in the case of PIN transactions, which is why some retailers like WalMart and CVS Pharmacy encourage debit card users to pay by PIN.