Tuesday, 23 December 2014
Posted by Mozo
The result of a wild one night stand between a bank card and a credit card, the debit card could be the answer to your student money problems.
While most debit cards use either the Visa and MasterCard networks, the distinction between the two is negligible; it’s the provider you should be looking at when deciding which card is right for you. On that note, let’s look at some of the features you can expect from a debit card.
So, what exactly are these hybrid cards? A hodge-podge of all different things, really. Here are some of their features:
Online shopping and overseas transactions
You can use your debit card in the same way you would a credit card, you just need to pay using your bank account funds instead of credit. That means you are able to use your student debit card for: online shopping, phone purchases, overseas transactions and ATM withdrawals and making contactless payments with PayPass or PayWave.
Like credit cards, debit cards offer a security blanket for shoppers. For example, many come with a ‘charge back’ facility, which will force a refund from a retailer if goods are not delivered, or are damaged on arrival. And you’ll get the security of Visa or MasterCard’s zero liability protection, which means you will be able to claim back on unauthorised transactions.
We know what you’re thinking: ‘Mozo, if I can get all of this stuff on a credit card, why don’t I just take the plunge and, well, get a credit card? I am a financially responsible young adult, that’s why I’m searching Australia’s leading financial comparison website.’
You flatter us. But, we aren’t letting you sign your life away that easily. Here’s a brief summary of the pros and cons of each card.
- No risk of credit debt
- Low (or no) fees
- No credit rating risk
- Only able to spend the money in your bank account (although, if you don’t trust your ability to exercise self-control, this might just be a ‘pro’)
- Credit line facilities can attract higher interest rates than low-rate credit cards
- Minimal rewards point options (and debit rewards programs often exclude purchases in certain shops)
- Money for food when pay day is two days away
- Direct debits can help you avoid debt
- Larger rewards networks
- Potential to develop a good credit history
- Debt attracts high interest rates
- Direct debits can just create a large monthly repayment you can’t afford
- Higher annual fees for rewards cards
- Potential to develop bad credit history
In short, if you really just need to be able to buy stuff online and save six seconds every time you spend less than $100 at a checkout, you probably don’t need a credit card just yet.