What Is a Direct Debit Card?
What Is a Direct Debit Card?Chase Financial Group refers to debit cards as "plastic checks," as they directly tap into a checking, savings or other deposit account. According to Consumer Reports, the number of transactions on debit cards now eclipses those on credit cards by more than two billion, and spending with debit cards now tops $1 trillion. The most active debit card users are typically women and those between the ages of 18 and 25. Visa, MasterCard, Discover and American Express are the most popular issuers of debit cards, which are accepted wherever their credit cards are accepted.
Uses
The debit card originated as a way to access automated teller machines (ATM) and expanded to include purchases of all kinds of merchandise. Today, it is used for all manner of transactions, including internationally, eliminating the need to exchange currency when traveling.
A growing number of young people receive their allowance on debit cards---cards like Visa Buxx were developed for this purpose and have varying levels of parental controls. Government benefits, such as food stamps, can be loaded onto debit cards, and they can also be used to make tax payments and court-ordered child support payments, while some pensions and health care benefits are now disseminated via debit cards.Benefits
Almost anyone can obtain a debit card, but not everyone qualifies for a credit card, so the former can be a good way to establish credit. Debit cards can also be used for things that cash cannot, such as online purchases, car rentals, airline tickets purchases and holding reservations.
Before debit cards existed, these activities were extremely difficult for those who did not want or could not qualify for a credit card. Cash spending is also difficult to track, whereas debit-card spending is reported on a monthly statement. In addition, debit cards do not create debt, and agencies and companies that use them to pay vendors and others realize substantial cost savings over mailing checks.Rewards
Like credit cards, some debit cards now offer rewards as a usage incentive. For instance, Chase Financial debit cards offer cash back or airline miles. Co-branding has also entered the debit card arena. One example is the Baby Phat debit card, which awards discounts on that company's clothing. Other cards offer rewards points, redeemable through a catalog, toward everything from pen sets and small appliances to cruises.
Warnings
To say that CNN financial experts Ken and Daria Dolan dislike debit cards is an understatement. The Dolans caution that if someone steals and uses your debit card fraudulently you won't have the same protections in place as you would if they had stolen your credit card, as a thief can quickly spend your account down to zero. Legally, you are entitled to recoup all but $50 of the losses, but practically, this can be a challenging process---and you'll have no money in the meantime.
In addition, companies that are holding reservations with your debit card may block out the balance in your account to ensure that funds will be available when they process the actual charge. In the meantime, you do not have access to those funds and, unaware that the funds are blocked, continue writing checks. This could cause you to become overdrawn and incur penalties and extra fees.Debit Card Conflict Resolution
If you have a complaint regarding the usage of a debit card, the United States Public Interest Research Groups (U.S. PIRG) may become your best friend. Put your complaint in writing to the debit card issuer and send a copy to the U.S. PIRG at: U.S. Customer Assistance Group, 1301 McKinney Street, Suite 3710, Houston, Texas 77010.
via ehow.com
