Advantages of using a Debit Card
Debit cards, issued through banks by Mastercard and Visa, are often misunderstood.
On the surface they can look like rip offs.
When you pay for a purchase with a debit card, the money is deducted from an
account that you have at the bank or occasionally from a money-fund account
at a brokerage firm. In other words, you're not getting a free loan of 25 or
more days as you would with a bank credit card or convenience cards.
However, these cards have the other advantages of bank cards and are often linked
to automatic teller and out-of-state check-cashing privileges.
Guideline: lf you have a convenience or bank card and are in the habit of paying
promptly with a check written on an interest-bearing checking account, it probably
pays to continue one of those cards. But if you're lazy about paying and would
have to pay from a non interest bearing checking account, a debit card can make
sense because you won't forget to pay since the amount is taken automatically
from your account.
At large stores, debit-card purchases are sometimes deducted electronically and immediately from your account. But at most other places, the transaction is handled much as a check would be, giving you a float of from three to twenty days. When that happens, the advantage of a debit card is immense: While other cards would merely give you the equivalent of an interest-free loan for the float period, a debit card lets you keep earning interest on the amount of the purchase until the transaction clears.
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