Is a debit card right for your wallet? Read on as we run through everything you'll need to know about these handy bank cards and how to choose the right one to suit your needs.

What is a debit card?

When you open a bank account in Australia, you'll have the option of choosing a debit card. A debit card allows you to make purchases from stores and ATM withdrawals which get debited from your bank account. Some people also refer to these cards as 'EFTPOS' or 'ATM' cards.

The two leading kinds of these cards available from banks and credit unions are Visa Debit or MasterCard Debit cards. This guide (and section of our site) mainly deals with Visa and MasterCard Debit Cards.

Why would I need a debit card?

Debit cards can help simplify your day to day spending by reducing the need to carry too much cash at any point. You can use your debit card to withdraw cash from ATMs, pay bills and make purchases in Australia or overseas using your own money.

Your debit card is directly linked with your bank account and uses the money in that account when you make a transaction.

It's a simpler and more secure way to make payments because your bank can protect you from fraudulent transactions and in the case that you lose your card, you can call your bank to block further transactions.

Visa or MasterCard?

Both Visa and MasterCard debit cards offer similar features and benefits. Whether you receive a Visa or MasterCard will depend on which bank you are with as each bank is usually aligned with one card provider.

What's the difference between credit and debit cards?

Both credit cards and debit cards let you make transactions online as well as offline. The main difference between the two is that a credit card allows you to 'borrow' money from the bank at a fixed interest rate (usually charged after a set interest-free repayment period), while a debit card only allows you to spend the funds you have in your bank account.

While you won't build up debt using a debit card, the main advantage with a credit card is that it gives you the liberty to split your expenditure as you want.

For instance, if you're making a big purchase, but don't have enough money to cover it, or you just don't want to empty out your account, you can pay with your credit card and control money outflow.

Both card types have their own pros and cons, and how much you choose to use one over the other is a matter of personal preference.

What are the advantages of a debit card?

• No debt: Debit cards are lower-risk, as they can't put you in a position where you might fall into debt since they only give you access to the money you hold in your account.

• No extra fee for ATM withdrawals: While you can use your credit card to withdraw money from an ATM because it's technically a 'loan' from the bank, you'll be charged interest on the cash withdrawal. Since your money on a debit card is treated like cash, you won't have to pay an extra fee while withdrawing from your own bank's ATM (although there may be charges from other banks and international ATM withdrawals).

• Security: Carrying a debit card instead of a stash of cash in your wallet is generally much safer. If you were to lose your wallet with only your debit card inside, you would be protected under your bank's anti-fraud policy and could get the card blocked from further transactions. But if you lost wads of cash, you likely won't be able to have this refunded by a bank.

• Cashback and rewards: The rewards programs for debit cards aren't usually as extensive as those for credit card rewards programs.  But with the growing use of debit cards, many providers have started offering cashback options and rewards, such as special offers on home entertainment products or movie tickets. Check with your bank about any schemes applicable to your debit card.

• Purchase protection: Generally, the products you buy using your Visa or MasterCard debit card should also be eligible for purchase protection. This is an insurance which covers your purchases against loss, theft or accidental damage to an item that you've purchased with your debit card for up to 90 days. Usually, the provider would require you to press 'credit' instead of 'savings' while making a transaction on EFTPOS to be eligible for purchase protection. Be sure to read the exact requirements for eligibility in the terms and conditions for your debit card.

• Tap and Go: Both Visa and MasterCard offer contactless payments, also known as PayPass or payWave. This means that when you make a purchase of less than $100, you don't need to swipe your card or enter your pin. You can just tap or hover your debit card over the machine to complete your payment. You'll know if your transaction was successful through an illuminated light or a confirmation message on the display screen.