Managing Money Debit Cards Are Mightier Than You Think

by the editorial team at Citi | March 13, 2020

Brought to you by Citibank.

Debit cards — the other plastic in your wallet — sometimes take a back seat to credit cards, some of which offer the opportunity to earn rewards points and airline miles through purchases.

But they’re a stronger financial resource than you might think, and many consumers are in on the secret. Forty-four percent of Americans say they primarily use debit cards — which connect directly to your bank accounts — for everyday purchases, like groceries and gas, according to a NerdWallet survey. They are more than a convenient tool for managing your daily spending, though; debit cards are both a standby of and a key to the modern banking relationship.

So don’t let the importance and value of your debit card — and, for that matter, the benefits of your banking relationship that come with it — fly under your radar, because you could be missing out on a host of great perks.

Here are a few reasons to bring your debit card to the front of your wallet, and to keep the benefits associated with banking in a digital age top-of-mind.

Better-known benefits

You probably already know more than you think about the advantages, but here are some reminders:

1. Built-in budgeting

When you use a debit card for purchases, you’re spending money that you have in your bank, so you don’t owe anything at the end of each cycle; the funds to cover what you buy come directly from available cash. For some users, this setup helps keep them from spending more than what they currently have, says Nathan Wade, managing editor for WealthFit Money. It can encourage you to spend within the budget you’re working with, and not beyond your means.

This is something that Alex Tran, a blogger at the fashion, fitness and travel review site Schimiggy.com, likes about his debit card: “I love using debit cards because you'll know exactly how much you can afford to spend,” he says, “which in turn helps with sticking to your budget goals.”

There can be no late payment charge, since the money is taken out of your checking account immediately. The fees you could potentially incur on a debit card tend to arise when you use another bank’s ATM — so avoid this by planning your cash withdrawals strategically.

2. Interest on deposits

Banks often offer interest-earning checking accounts, so if you have a debit card linked to yours, you’ll earn interest on the cash behind the card. Take note that there may be a minimum balance required in order to earn interest.

“While such accounts may not earn you a significant amount of interest, it doesn’t require any extra effort on your part, so it’s free money,” says Jim Wang, founder of the financial education site WalletHacks.com.

3. Quick access to cash

This may seem obvious, but it’s worth mentioning: With your debit card, you can get cash at most ATMs, anywhere in the world. Of course, you might pay a withdrawal fee, depending on your bank and where you’re grabbing cash. And other fees, such as charges for converting currencies, may also apply in other countries. (Citibank® Debit Card users can locate the closest of 60,000-plus ATMs in the U.S. offering fee-free access to cash here.) Some shops and other retail merchants, such as supermarkets, may serve as a cash-back point, too; when you pay with a debit card, you can elect to add to the bill and get the balance back as cash.

“I love my debit card because I use it to withdraw cash when I’m shopping at my local [pharmacy],” says Stacy Caprio, a financial blogger at Deals Scoop. “I simply pay with my debit card and take out $20 or $40 in cash at no extra charge. It’s easier for me than going to a bank to withdraw cash.”

Quote
I love using debit cards because you'll know exactly how much you can afford to spend
End Quote

Lesser-known benefits

These extras are less celebrated, but still add to the list of positives:

1. Early access to tickets to shows (and other perks)

Want to snag a seat to that concert coming to town? Being a cardmember with some banks may grant you early access to buy tickets to events. For instance, those with a Citibank Debit Card have access to purchase presale and preferred tickets to concerts, sporting events, dining experiences and more through the Citi Entertainment® program. Check if you can sign up for emails so you’re alerted about upcoming entertainment offers.

There may be other purchase benefits, depending on your card’s payment network and issuing bank. This may include, for example, “perks like purchase protection, extended warranties, and complimentary room upgrades,” says Kevin Chen, writer who covers credit cards at financial comparison site Finder.com.

2. Easy bill pay

Your connection with your bank will often yield access to bill-pay features, in which you can view and pay bills such as utilities, student loans or gym memberships. Skip the stamps and check writing and have your bank send payment to virtually any person or business in the U.S. Some banks even raise a flag if your bill has increased. “I just started doing this relatively recently,” Wang says. “I pay my electricity bill directly through bill pay.”

You might also have access to a person-to-person payment service, which allows you to make fast, direct payments from your checking account to friends and family. This makes it even easier to split the bill at dinner or to send someone money for a joint expense.

band performing on stage at a music concert

3. Transaction alerts

Another service you might not be utilizing is the opportunity to have your bank ping you on your mobile device at certain times or based on account activity, so you can stay on top of your banking. You might be able to get alerts for things like a low balance, bank deposits, bills, checks and even CD maturity. You can generally set these to arrive via email or text — or both. Check with your bank to see what alert services they offer.

4. Spending insights

With access to information like transaction records, your financial institution may be able to identify patterns in your spending, helping provide insight into your money habits. Some banks may allow you to pull in information from external accounts to make the money picture more clear and complete. In some cases, banks can deliver advice reflecting your monthly spending, saving and income data. You may be able to set spending and savings goals, and learn from the way you use your money today to build habits that will help you achieve financial success into the future. And by tracking and comparing monthly spending to income, you can spot areas in which you can tighten and improve your finances.