Debit Cards and Other Payments

Historically, paper money and coins have been the primary source of paying for goods and services. More recently personal checks have been introduced and their popularity flourished. A third major payment option has been credit cards which have become a primary form of payment for millions of people world wide. The convenience, perks, and peace of mind that credit cards often provide have all but ensured that this form of payment is here to stay. With all of these options available it may seem the creation of a new form of payment would be unnecessary. However, there is a new kid on the block called a debit card which offers an interesting alternative to more traditional payment vehicles.

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Advantages and Features of a Debit Card

A debit card's appearance is almost identical to a credit card and often comes with a MasterCard or Visa affiliation. However, unlike a credit card a debit card is backed by a checking account. When the card is presented as a form of payment the amount of the purchase is deducted from the individual's checking account. If there are no funds in the account the transaction is declined. This system has created some competitive advantages over the three traditional forms of payment.

Debit cards set limits on spending. Although they do not prevent an individual from excessive purchases debit cards do prevent spending beyond what is available in the bank. This is very different from a credit card purchase where there is no requirement to "own" the amount of money that you are charging.
The need for carrying around sizeable amounts of cash is eliminated. This is a great benefit in terms of safety and convenience.
Debit cards are more convenient that checks. Although Debit cards are drawing funds from the same account that a check would it is quicker and eliminates the need for additional pieces of identification. Additionally debit cards with the Visa or MasterCard logo are often accepted at establishments that do not accept checks.

Debit cards offer many advantages and therefore it's not surprising that they are gaining in popularity. These cards are now being used for all manners of purchase from coast to coast. They offer a quick convenient form of payment and they afford less opportunity to accrue large debts.

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About the author:

Mark Carney is a professional consultant with First American Debt Consolidation and Loans, a debt consolidation service specializing in financial education, credit counseling, and debt management services nationwide.