Debit card popularity grows as 'a safe alternative'

By Mozo ·

High credit card bills are encouraging Aussies to compare debit cards before switching to this safer alternative, an expert has said.

Paul Clitheroe, director of financial planning firm ipac, wrote for the Sunshine Coast Daily that debit cards work best for people who follow tight spending and saving budgets because all card spending and ATM transactions are drawn directly from the user’s account.

He said that this removed the risk of running up high debts because debit card purchases usually do not involve additional debt or interest charges, nor do card holders usually have to pay an annual card fee.

"They may not be so popular with credit card holders who are too keen to earn reward points on their spending," Mr Clitheroe noted."However, for the one in three card holders who carry an ongoing debt, debit cards offer an interest-free alternative."

This week a report by News Limited also found that a high number of personal credit card applications can be "a black mark" on credit reports, making it more difficult to secure bank loans.

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