To make important transactions from your current or savings account, you need the Debit Card provided by your Bank. There are various benefits of this card. It offers some great deals on sales while buying goods. Each person must possess this card if they have a bank account and are adults, as it is useful in various situations and emergencies.
This article will provide you with all the necessary information about Debit Card, benefits, and fees:
What is Debit Card
It is an expenditure card which you can use to buy goods or to withdraw cash from your Bank's ATM; this card, also called a bank card or check card, is linked to your checking account. This card minimises the need to carry cash on you but can charge certain fees for using it.
How a Debit Card works?
A debit card, resembling a credit card, is directly linked to your checking account. However, its functionality differs considerably. While credit cards are subject to a predetermined credit limit, these cards rely on the available funds in your account.
A debit card doesn't result in debt accumulation since you can access your existing funds. Monthly minimum payments, a characteristic of credit cards, are unnecessary with debit cards as there is no debt to settle.
Through this card, you can withdraw cash from an ATM or make purchases. While many debit card transactions may require your PIN, some cards without this additional security can make purchases.
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These cards instantly deduct the purchase amount from the linked bank account. This means your spending is confined to the balance within your checking account, and the available funds for spending will fluctuate under your account balance.
Debit Card Fees
Usually, these cards do not charge any annual fees or cash-advance charges. But let's look at some potential fees you might have to incur:
- Insufficient Fund Fees: The bank charges an insufficient fund fee when you use your card to withdraw an amount of cash more than you have in balance.
- Foreign Transaction Charge: You can face 3% of your total payment as fees if you utilise your card to make any foreign transactions.
- Overdraft Fees: You will face an overdraft fee when you cross the limit on your Overdraft protection (if you have registered for it).
- ATM transaction charge: In a case where you withdraw money from an ATM that is not your Bank's ATM, then you will face an ATM transaction fee, which is also known as an 'Out-of-Network' fee.
- Replacement card Charge: If you apply for a new card after you lose your initial one or it gets stolen or damaged, you will face a “Replacement Card Fee.”
Varieties of Debit Cards in India
Let's take a look at various cards available in India:
- Visa Debit Card
These cards are issued through partnerships between banks and VISA Payment Services. They provide a secure online transaction infrastructure called Verified by Visa (VbV).
- RuPay Debit Card
Developed by the NPCI, RuPay cards serve as a domestic card program designed for internet transactions on the Discover network and ATM transactions through the National Financial Switch network.
- Maestro Debit Card
Maestro cards are universally accepted and facilitate cash withdrawals from ATMs worldwide. You can also use these for online transactions at retail outlets across the globe.
- Contactless Debit Card
Customers can use contactless cards that rely on Near Field Communication (NFC) for quick, convenient payments. Simply tap or wave the card near Point of Sale (PoS) transaction terminals.
- Visa Electron Debit Card
Visa debit cards and Visa Electron debit cards share similarities, but Visa Electron does not offer an overdraft option, making it a secure choice for various transactions.
Credit Card and Debit Card
Let's look at some of the differences between a Debit and a Credit Card:
- Financing: A debit conventionally is similar to paying cash or writing a check. The amount is withdrawn directly from your bank account. In contrast, a credit card allows one to buy things on credit. The credit card company pays the purchase outright, and you receive a monthly bill to repay them. If you don't pay the balance completely, interest is charged to the remaining balance in the next billing cycle.
- Rewards: Many major credit cards have supplementary rewards to take advantage of if you apply for their card, which is not usually the case with debit ones. These rewards far exceed the average rewards of most debit cards, which usually offer cashback or at least 1% on all purchases with the card. Credit cards also can give points redeemable on travel, cash back, and other bonuses.
- Protection: If you are a victim of fraud and you report the charges on your credit card, you typically will only be liable for a certain figure. Credit card companies typically offer additional protection, sometimes offering no liability. This is rare for a debit one.
Transfer cash from a Debit Card
Let's take a look at how to transfer cash online:
- First, visit the provider's website.
- Enter the 16-digit card number, expiry date, CVV and name appearing on the card to proceed.
- Choose the 'Money Transfer' option and provide the beneficiary details. This can take upto a day for Bank to activate beneficiary details, and this duration varies from Bank to Bank.
- Once the beneficiary account is set up, specify the transfer amount.
- Input the OTP sent to your registered number.
Transfer cash from a Debit Card at an ATM
Take these steps to transfer money via an ATM using your card:
- Visit your Bank's ATM.
- Now, enter your PIN after entering the card.
- Look for the 'Transfer' option on the screen and click it.
- Enter the beneficiary's card number.
- Specify the amount you want to transfer.
- Select the account type (savings or current).
- Confirm the transfer.
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Conclusion
A Debit card is an important thing to have for making purchases or paying bills. Using it strategically is the most important as sometimes it charges certain fees. Knowing about such fees beforehand can help you decide rightfully. There are various benefits and limitations of these cards, so use them responsibly.