In this report, wikihow.com gives tips on how to ensure your transactions go through, leading to less embarrassment at checkout.
Make sure you have enough funds before you use your card. You should check your account balance before you use your debit card.
- Your bank may give you the option to set up alerts through online banking to let you know when your balance is low. This way, you can check your account more frequently and be aware of how much money you have to spend in your account.
- Note the fees associated with your debit card. You should be well aware of the fees you may be charged when you use your debit card. This will prevent you from getting a small shock when you open your monthly bank statement to find a series of debit card usage fees. You should get a full list of the fees associated with your debit card from your bank so you can use your debit card wisely.
You may be charged a small fee if you use an ATM machine that is not operated by your financial institution.
- Be aware of “holds”. In some cases, a merchant may put a “hold” on your transaction, where they will get approval from your bank for an estimated purchase amount. Once they get approval for the estimated purchase amount, you will be charged. This “hold” may take 24-48 hours, so you may not have access to held money in your bank account during this time. You should try to keep track of your held transactions throughout the day so you do not try to use money that is being held in your account.
Many merchants use “holds” to make sure you have enough funds to pay for a purchase. Often, your debit account may be held when you reserve a hotel room using your debit card, or when you use your debit card to pay for petrol at the station.
For example, once you make a payment at the pump, the station will create two transactions. The first transaction will be to get approval from your bank for an estimated purchase amount. The second will be for the actual amount of the purchase. The first transaction must go through and be cancelled by your bank within 48 hours for the hold on that amount to be lifted from your account. Then, the second transaction will be processed.
Difference between debit and credit cards
If you are able to keep your expenses in check and use credit cards wisely, paying for your daily expenses with credit or debit cards is a no-brainer.
Using plastic can greatly facilitates budgeting, since sites like Mint.com can automatically track your purchases, and you can avoid unsafely carrying large sums of money for regular purchases like groceries, gas, or entertainment.
This report by moneycrashers.com explains the difference between debit and credit cards.
Eventually, a cashier will ask, “Will that be credit or debit?” What goes through your mind when you decide? Do you simply brush it off because it doesn’t matter to you? Do you think about whether one of the options will actually save you more money, or how your financial security will be affected by your choice?
If you are tracking expenses and you are spending less than you make with a budget, and saving for the future, but have been functioning on a cash-based budget, it may be time to start paying for your day-to-day expenses with a credit or debit card. This can make budgeting much easier and can make you eligible for rewards programs through your card company.
Credit and debit cards both come with their perks and drawbacks for you to consider.
While some debit cards may allow an accidental overdraft and charge you a fee, it is impossible to significantly overspend your account with a debit card. With a credit card, you can lose track of your spending and go overboard. With most debit cards, however, if you try to spend more than you have in your account, the purchase simply won’t go through.
Many credit cards do not have annual fees, and if you pay the balance in full on a monthly basis, you will not incur interest or penalties. This means you get all the advantages of credit card use without paying for them, as long as you keep your spending within your means.
If you let your credit card spending get out of hand, you can easily find yourself firmly entrenched in debt. If you cannot keep your spending in check, you can easily end up paying interest, costing you a great deal of money over time.