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.”