The Dangers of Debit Cards
Most bank accounts, even the most basic of bank accounts, usually issue holders with a debit card that they can use to pay for goods and services when cash is either inconvenient or not an option, for instance when shopping online.

However, debit cards do come with some risks to you financial well being, one of them being that you can lose track of how much you are spending and this can lead to you spending beyond your means! This is easily done if you, like probably the majority of people, don’t keep a record every time you spend.

And once you have overspent things tend to just get worse as banks will issue large overdraft fees or penalties for making a payment when there are not sufficient funds in your account. However, this is something I have never really understood as I’ve always thought that it would be much easier for the bank to simply stop the payment at it’s source, you, and prevent you going overdrawn. I guess this is just one way they have made money over the years!

You can avoid overspending and incurring overdraft fees by making sure you know exactly how much you have in your account at any given time. The best way to do this is to set up a budget sheet and make a note on it every time you spend money, perhaps by keeping receipts and totalling them up at the end of the day, and this will give you a running total so you can see when you are starting to run low on funds. Another way in which this can help is that it can actually help you to curb your spending as you can see where you may be wasting money and put a stop to it. Furthermore, there’s nothing to put you off spending quite like seeing your monthly budget running down at an alarming rate!

Fraud is another risk associated with using a debit card as they do not have the same levels of protection as credit cards. If someone fraudulently uses your debit card and the money is immediately taken from your account then it can be difficult to get this money back. And even if you do successfully convince the bank that your card has been used fraudulently, you may not see the money straight away as banks can legally take up to 20 days to restore the money to your account whilst they investigate your claim.

Although debit cards don’t have the same level of protection as credit cards under section 75 of the Consumer Credit Act 1974, they are now afforded similar protection under the ‘Chargeback’ scheme. This means that if you use your debit card to pay for goods that you don’t receive because, for instance, the company you were dealing with went bust, then you have 120 days to contact your card issuer to get a refund from them, much in the same way you would if a credit card transaction went wrong for the same reason. It is also worth noting that Chargeback can also be used for credit card purchases under £100.

Author Bio: Robert Fox is a freelance writer, author, and editor for money-fox.com, a personal finance blog geared to making your money go further.