/ 15 April 2008

The benefits of a debit card

Money seems to be used less often these days. I’m not talking about disposable income, I’m talking about the jingle in your pocket and the change in my purse.

Pure cash-only transactions appear to be decreasing. This does not mean that other payment instruments such as cheques or credit and store cards are necessarily increasing.

Daily consumers withdraw cash for goods or services and pay high bank charges for this privilege.
The widespread acceptance and use of debit cards is the primary factor contributing to this shift, so let us examine debit cards and explore their influence on consumer behaviour.

Debit cards offer a far safer and affordable alternative to cash because they offer various benefits. Firstly, debit cards are convenient because you don’t have to worry about finding an ATM when you want to make a purchase.

Purchase transactions are cashless, provided that the merchant has a point-of-sale terminal.

Debit cards are also much safer because you do not have to stand at an ATM and withdraw cash or even carry cash on you, making you less of a target for crime.

Best of all, however, is that you cannot overspend and become indebted because you can only transact to the value of the funds available in the linked bank account.

You could say that a debit card helps control one’s budget. Debit-card usage does not seem to be such a bad deal, all things considered. Naturally though, banks levy a small charge for this transaction.

One should bear in mind that as with most other things involving money – especially your own – it pays to shop around. There may be banks that allow debit-card purchases with zero transaction fees.

Get hold of your latest bank statement and look at all those debit-card purchases and cash withdrawal entries. Note the bank charges linked to those transactions. It all adds up very fast, so it’s certainly worth investigating the cheapest options.

Remember this on your next visit to a bank: if you were in the market for a new TV or car, you probably wouldn’t buy the very first one that caught your eye so why do it when it comes to financial products?

The market offers various products and you cannot enjoy these benefits until you are aware of all the options available to you.

Yolande van Rensburg is head of communication and public relations at Capitec Bank.