The popularity of debit cards grew in recent years all across the world; and, UK users are also following the global trend. With the perception of the growing popularity of debit cards, 60 million card transactions per day are forecasted up to 2026 in the UK. These plastic cards allow the holders for spending money using the deposited funds with the card provider agency. In October 2017, total purchase transactions through debit cards reached £ 40.8 billion. UK residents prefer to have debit card rather than the credit card. At the end of 2016, there were 51.1 million debit card holders in the UK while the credit card holders were 32.3 million. The statistics show that 58% of UK people are more likely to have a debit card. It is also revealed that UK households tend to spend more with a credit card rather than with a debit card. The average purchase made by credit card is £53.55; it is 39% higher than the £38.43 purchases made by debit card.
The Trend of Holding and Using Debit Cards:
The statistics reveal that UK households love to have a debit card but prefer a credit card to make big purchases. Using a credit card to pay even the small payment is the growing trend because people love to take advantage of interest rate free period. The cash advance facility, zero interest rate period, secure instalment payment facility, promotional offers etc. keep the users attracted towards credit cards despite the maintenance cost and the high possibility of penalties in case of late payments. The debit card allows making transaction only if the associated account has sufficient funds; therefore, there is no scope of penalty. A debit card is an ATM that allows getting instant cash anytime anywhere without going to a bank or issuing agency.
Advantages of Using Debit Card:
Carrying a debit card is safer than carrying cash
– If a £ 50 note fells down out of pocket, it is almost gone; therefore, moving large cash amounts is never a good idea. However, going out FCA regulated one or two days holiday without cash seems impossible but the presence of debit card delivers the sense of financial security because nowadays, ATM machine can be found in any area.
Online Bill Payment and shopping
– A debit card can be used as the credit card to take the benefits of all the promotional schemes. Its use for paying monthly utility bills saves you from going to the concerned department or to do paper formalities. Whatsoever payment you make, it gets registered in your bank account as a proof organisations payment.
Accessible to Track Spending
– Many people write on paper and then forgot after putting it. When the transactions are checked, many documents or even the written cheques are found missing. The result is expensive, annoying, stressing and time-consuming. Each debit card transaction detail comes to your mobile phone also in addition to going to your bank account register; therefore, you can better track the expenses with knowledge of balance in an account.
Good for bad credit holders
– If you have bad credit or poor credit history, getting the credit card is a tedious as well as expensive task. Bad credit history potentially prevents you from getting many things done by reasonably priced borrowing. The numbers of companies charge heavy for issuing the credit card to bad credit holders. Since the debit card is applicable almost everywhere as the alternative of a credit card, it is good for low credit score holders to save more.
– The minimum age for getting a personal credit card is 18 years, but the debit card can be used by anyone having its own account. It is a great learning tool for teens to learn the management of available finances.
Better security than cash handling
– Nobody else can use your debit card without your permission and knowing the PIN. Even if it is lost, you can get another one from the bank by blocking it immediately. If the debit card is lost/stolen, it should e cancelled at the earliest.
Disadvantages of Debit Cards:
- Unlike a credit card, a debit card doesn’t provide an interest-free grace period. The debit card payment is of pay now nature.
- A debit card provides comparatively lower-security protection levels of than credit card. Theft of users’ PIN is more comfortable than doing fraud through signature-based credit card.
- The debit card has a pre-set spending limit. The user can spend only the amount available on the account.
- Debit card users often face unexpected charges. Many mainstream regular banks charge for overdraft, money transaction, and numbers of uses more than the monthly limit etc. Some banks even charge for using the ATM of other banks more than specific times.
- Debit cards don’t help to build a credit history because the users spend the money already available in account that too without any facility of overdraft.
Debit Card or Credit Card – Which is Better to Use?
If you can’t decide use debit card or credit card with preference because of risk factors or other pros and cons, a prepaid debit card may be your choice that offers some benefits of credit card and debit card both. Like the credit card, it keeps the primary checking account protected from exposure to anyone unauthorised. If someone steals the card number, the only probable money loss can be up to the money balance on the card. However, recovering the loss because of mishandling the card is a slow and complicated process. Like the debit card, prepaid card prevents you from exceeding the allowable budget. You can spend only the funds loaded on the prepaid card.
Whatsoever kind of plastic card you use, taking extreme precaution is your duty. Although the modern age debit cards have advanced security features; yet, the possibility of misuse or fraud is high. Never make the following common mistakes for worry-free debit card use: