Monday, November 9, 2015

Cash vs debit card: Which is safer to use?

Whenever you go on shopping sprees, do you always carry so much cash to pay for the stuffs that you buy in the markets? Well, if that is your choice, so be it.

To most shoppers, this kind of practice is nothing new anymore. And it shouldn’t even raise your eyebrows whenever you see some people take out wads of money to pay for the goods that they buy.  They always believe that it doesn't only free them up with the worries of paying for  the increasing interests that their monthly bills could pile up. This, too, means to say that they'll have less to worry about because once they have paid those purchases with cash, they’re done.

Mind you, there are people who don't feel secured having wads of cash in their pockets for personal reasons. Instead, some of them prefer to use "plastic money" to buy things that they need.

While cash payments are good, using your debit card for your purchases is a much safer alternative. Aside from the convenience that it may give you, sometimes you can also reap hefty reward points from all purchases that you make, especially if the bank wanted to attract new customers in a particular branch.

Unlike the credit cards, which can easily be used by anybody, the debit cards have built-in security features which protect card holders from scammers and hackers alike. Although there are instances when card holders are victimized by fraud probably because of their carelessness, the use of  a debit card is something that every account holder should take into consideration.

In lieu of taking the time to withdraw cash from your deposit account, using the debit card is another best alternative for someone who is busy or in a hurry. From the stand point of a careful card holder, maximizing the use of the debit card seems to be a good idea and a portable way to buy things handy.

But what exactly is a debit card and what are its advantages?

The U.K.-based Money Advice Service has described a debit card as the first payment choice for people who don't like to pay on credit. It adds that any debit card holder can withdraw money from cash machines, and pay for purchases either online or by phone.

"When you pay with a debit card, the money comes directly out of your account. It’s basically the same as withdrawing cash on the spot and handing it over – but safer because there’s a bit of fraud protection and the card is easy to cancel if it’s lost or stolen," MAS said.

Like the credit card, you an swipe it, punch some buttons and put it back in your wallet. How tough can it be? Actually, experts say there are a handful of ways you can modify your debit card usage to make sure you're not wasting any of your hard-earned money on unnecessary fees or having your valuable dollars locked up by some companies.

According to Dana McDonald of StockMonkeys.com, a financial and investment site: “You don't create debt using debit cards and that's always smart if you have the money in your account. “

McDonald noted that banks are looking to boost profits by reducing the risks of using debit cards and offering new perks for consumers who are willing to switch, such as rewards programs. “And it's working. Debit cards today account for about half of all card transactions.”

However,  you also need to keep track of your card, she warned. “If your card gets stolen, a thief can empty your bank account in minutes. Thieves don't even need your card, as long as they have your name and card number.”

 Meanwhile, Linda Sherry, director of national priorities for watchdog group Consumer Action, shared some of her views to CreditCards.com.

She encouraged cardholders not to opt for overdraft protection, “especially if you know deep in your heart (be honest!) that you can sometimes be a little careless when it comes to money management. It can only take a few errant swipes to rack up some big fees.”

Sherry said that cardholders should be aware of what the banks are sending them. “Even though some banks are starting to cap the number of overdraft charges they'll zing you with over the course of a day or a week, it's still money coming out of your pocket,” she adds.

 “A better solution is to link the checking account connected to that debit card with a savings account or line of credit,” she explained.

Or, better still, write down your transactions in a check register or go online to check your account information, Sherry said.

While some people would like to withdraw money in person or use the teller machines, Sherry still prefers online banking as the best option. Likewise, she encouraged “every cardholder to have a good password (don't use "1111" or your birthday or your dog's name), and don't write it down anywhere -- this helps prevent the chance that someone might break into your account.” (By R.G. Altarejos)

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