Following the digitisation drive and the demonetisation by the Modi-led Government, the number of citizens in the country resorting to using plastic cards - debit and credit cards - has spiked dramatically over the last year and a half. In fact, the Reserve Bank of India released a report saying that just in the month of January 2018, over a billion transactions took place in the country using debit and credit cards which amounted to more than a trillion rupees. The cashless drive in the country has resulted in citizens - some out of force and some voluntarily - resorting to carry out most of their day-to-day transactions via plastic cards, UPI transactions and e-wallets. While the usage of debit cards has been around for quite a while now, now citizens more and more are making the best use of this cashless mode for transactions. While there are numerous benefits that come with debit cards, there also some drawbacks of using them at POS terminals and on online portals - and this is just because of the ever-increasing frequency of fraudulent techniques to steal the money of customers. That said, let’s get into the pros and cons of using debit cards and what you should keep in mind if you decide to make a transaction either at a POS terminal or online using your debit card.
The Pros of using Debit Cards
Customers holding debit cards are at the receiving end of the below listed advantages:
- For those holding debit cards, there is no requirement to carry physical cash, which is quite a secure measure of making transactions. There’s no possibility of your money getting lost or stolen in this way.
- Using a debit card at POS terminals will result in faster transactions and reduce your time in a queue.
- Apart from using a credit card, when it comes to spending using a debit card, one can spend only up to how much he/she has in their bank account and not more. There is no paying back system and interest over the money borrowed and so on.
- Customers are offered a debit card when opening a bank account. In most cases, the fee is waived for the first year of holding the card.
- A customer holding a debit card at no time has to face penalties and pay dues and so on, as whatever is in the bank account of the individual can be used.
- Now, for high-valued transactions, customers can break the amount to be paid in EMIs - just as one can do with a credit card.
- If there is a requirement for cash, one can make a withdrawal from any bank ATM across the country and it is completely free for withdrawals from the same bank ATM. for withdrawals from other bank ATMs, the debit card holder is granted 3-5 free withdrawals in a month.
- With every purchase made using one’s debit card, the card holder will earn points that can be redeemed in the form of movie tickets, travel tickets, discounts and so on.
- For certain cards, customers are offered fuel cashbacks, dining discounts, travel discounts and so on.
Cons of using Debit Cards
Debit card holders might face the below listed disadvantages somewhere down the line:
- If by chance you are charged for a transaction but it doesn’t happen - either a recharge or payment of bills or to purchase a product online - it will be a difficult process to get a reimbursement.
- Using your debit card at other bank ATMs will be chargeable after a certain number of withdrawals. The charge in most cases is quite steep.
- In some cases, redeeming the reward points might prove to be quite a hassle and most cases the the third-party site where one can redeem the points won’t work.
- Debit card transactions have no effect on one’s credit score as with credit card transactions. To avail any type of loans, customers need to avail a formidable credit score - anything above 750, and debit cards do not have anything to do with this regard.
- Fraudulent techniques such as skimming, phishing, SIM swap and so on have put debit cards at risk and have questioned its security. Now, if a fraudster manages to duplicate the details of the debit card, in most cases, the money might be stolen forever. Approaching the bank to invest the case and getting a reimbursement or an insurance coverage for it will certainly be quite a task. The biggest drawback being that if one’s card details have been duplicated, the entire money in one’s account is susceptible to fraud. On the other hand, if it happens that the money in your credit card is stolen, then only the money that has been loaded on the card is susceptible to fraud. And if it does get stolen, then since it’s the bank’s money, the bank will do everything to get the money back and investigate the case. In most cases, the money stolen wouldn’t be your burden as with in the case of a debit card.
- Do I need to keep the same PIN that the bank has given me when I first receive my debit card?
- What should I do if my debit card is lost or stolen?
- What happens if the money in my account is withdrawn for some unknown reason?
- What are the debit card transaction charges for withdrawals from other bank ATMs?
- Does my debit card have a positive effect on my credit score?
No, in fact, as soon as you receive the PIN from the bank, the first thing that you need to do is to change the PIN for security reasons. It is important for customers to change their PIN frequently to enhance the security of their account.
If your card is stolen, the first thing that you need to do is to make sure that you block your card. You can do this either by calling the bank’s customer care or by doing so via your internet banking account.
If the money for some reason has disappeared from your account, then you have to report the case immediately to the bank. If required, you would also need an FIR from the local police department to register a case of fraud with the bank.
Customers are allowed between 3-5 withdrawals from other bank ATMs in a month. Post that, every withdrawal is charged a certain fee - but this varies between banks.
Debit card transactions have no effect on your credit score.