The Debit Card Benefits You Never Knew Existed
How do you pay for your daily spending? Many people enjoy the convenience of cashless transactions. When you use a debit card or credit card, you don’t have to worry about carrying enough cash or finding a pen to write a check.However, these two kinds of plastic aren’t created equal. While you may already be aware of credit card perks like points and cashback rewards, you may not know that debit cards can come with many of the same benefits. Keep reading to find out how you can take full advantage of your debit card.
1. Avoid fees and service charges
Unlike credit cards, which often come with annual fees, late payment charges, substantial foreign transaction fees of up to 3%, and other costly extras, debit cards typically have few or no fees attached. If you use your debit card carefully, you can avoid incurring a fee altogether.
For example, some banks charge a few dollars (on top of the ATM’s fee) when you withdraw cash from an unaffiliated ATM. But “ATM fees” are easy to dodge if you plan ahead. When you know you’ll need cash, you can visit an in-network ATM to get it; or you can take advantage of a store’s convenient “cash back” option when you pay with your debit card.
Since a debit card acts like an electronic check, taking money from your checking account as you use it, you could incur an overdraft fee if you use your card when your account balance is low or negative. However, this is another easy-to-avoid fee. Many banks offer overdraft protection services ranging from lines of credit to rejecting your card for insufficient funds so that you can’t accidentally overdraw your account. With online and mobile banking, you can check your balance anywhere to make sure you have enough money before using your debit card.
2. Stay accountable for your spending
Debit cards are also called “check cards” to convey their function as a plastic check. When you charge a purchase on a credit card, you don’t actually have to pay for it until the next month, and even then your minimum payment may be lower than the full balance. In contrast, debit card purchases remove the money from your checking account right away (if you select the debit option and enter your Personal Identification Number – PIN) or in a day or two (if you choose the “credit” option). Real-time payment holds you accountable to spend no more than you actually have. It’s easier to make impulsive purchases with a credit card because you can have the item now and worry about paying for it later.
3. Faster payments mean better budgeting
Just as debit cards hold you accountable to spend responsibly, they also make it easier to stick to a budget and resist overspending. If you write a paper check, it may not be cashed for days or even weeks. In the interim you could spend more than you actually have, especially if you don’t perform a daily account reconciliation. The faster, and in some cases instantaneous, payments linked to debit cards make it clear how much money you have left. Debit cards work well with online and mobile banking as well as budget management apps and websites because you can see your up-to-the-minute balance and account activity in black and white.
4. No interest charges
Perhaps the best reason to use a debit card instead of a credit card is interest. Credit cards are known for charging high interest rates that can also fluctuate, usually in response to changes in the Prime Rate. Annual percentage rates on credit cards range from 10% to as high as 32.99% (if you end up with a penalty interest rate due to late payments). If you’re not disciplined about paying the balance off every month, paying with credit cards will usually hurt you financially. When you pay with a debit card, you avoid expensive interest charges that end up greatly increasing the price of your original item.
If your wallet has ever been stolen, you know the painful truth that the cash is gone forever. Debit cards protect against theft because no one can use your card at an ATM without knowing the PIN. The recent addition of chips to debit cards offers further protection. Some debit cards also offer security protection for online shopping so that only you can make purchases with your card.
6. Debit cards are linked to interest-earning accounts
Many banks offer multiple kinds of checking and savings accounts, including interest-earning options. There’s usually a minimum daily balance required, but in return you get both the benefit of earning interest and the convenience of using a debit card for cash withdrawal and purchases. Compounded monthly interest is like free money added to your account balance that is accessible through your debit card.
7. Bank and Merchant Rewards
Have you heard of rewards credit cards? Now some debit cards have joined the rewards game. You can earn points for dollars spent and redeem your points for travel, shopping, or gift cards. The rewards are typically for purchases made using your signature, not your PIN. The process is the same as for credit cards but you benefit from no annual fee, no interest charges, and all the other debit card perks we’ve just mentioned.
Merchants, on the other hand, prefer debit card transactions, especially the PIN entry variety, because they pay less per swipe to banks than with credit cards. That’s why some merchants encourage debit card payments, particularly those using a PIN.
8. Lower fees for tax payments with credit cards
When it comes time to pay federal taxes, you can save on “convenience fees” if you pay with a debit instead of a credit card. Of the IRS’s three payment processors, all charge a flat fee of $2.25-$3.95 for debit card payments. For credit card payments, the fee is a percentage of the total payment—from 1.87% to 2.00%—or a minimum fee that matches the debit card flat fee. In this scenario, you’d pay at least the same amount in fees if you paid with a credit card, but could potentially pay considerably more. For example, a person who owes $2250 in taxes on tax day would pay an additional $45 with a 2% fee.
MasterCard Specific Benefits
At Union Bank we offer our customers the Enhanced MasterCard debit card. Here’s why:
- ID Theft Protection: You can sign up for this free service from MasterCard and their partner CSID, a leader in the identity protection field. You’ll receive an alert if any of your personal and sensitive information is bought or sold online. In the event that your wallet or other important documents are stolen, you’ll have help with the frustrating process of replacing everything. Most importantly, our identity theft and fraud experts can help you restore your credit score and other elements of your identity after it is stolen.
- Zero liability: Protection from theft and fraud—you won’t have to pay for what you didn’t buy when your account information is stolen. This guarantee applies to ATM transactions as well as any kind of online or in-store purchase.
- Extended warranty: Buy something with your MasterCard and the manufacturer or store warranty will be doubled for up to an additional year.
- Price protection: If you find a lower price on an item you purchased with your MasterCard within 60 days, you could receive a statement credit for the difference.
- Satisfaction guarantee: Buy it and don’t like it? If the store won’t let you return it and no more than 60 days have passed since the purchase, you’re eligible for up to $250 in refunds from MasterCard.
- MasterCard Global Services: No matter where you are in the world, you’ll have 24-hour help with lost and stolen cards, emergency card replacement, and emergency cash advance.
- Airport concierge: MasterCard Airport Concierge, provided by Global Airport Concierge, offers you a personal, dedicated Meet & Greet agent to escort you through the airport on departure. Additionally, in some airports use of your card may allow the security and/or immigration process to be expedited.
- Travel services: Plan your next trip by taking advantage of the hotels, flight, and vacation package deals offered by MasterCard Travel Services.
- Priceless Cities exclusive offers: MasterCard now has 36 cities that are part of its Priceless® Cities line-up, affording debit card users special travel-related deals (meals, events, hotels) in these cities.
- Fuel rewards network: Link your debit card to your Fuel Rewards Network and get at least 5 cents/gallon off your next trip to the pump for every $100 spent using your card.
Find more details and exclusions on the above benefits here.
- Bonus – Union Bank offers debit card holders access to ScoreCard Rewards: With ScoreCard Rewards you can earn points for every dollar spent, which can then be used towards merchandise, travel, and other rewards.
- Bonus – Union Bank offers debit card holders access to the Allpoint ATM Network: The Allpoint ATM Network is America’s largest network of surcharge-free ATMs, with over 55,000 ATMs worldwide, including 2,500 in the New England area.
It can be easy to go day-to-day using your Debit MasterCard without thinking of all of these benefits. However, the enhanced benefits that come with your Union Bank debit MasterCard are considerable. Take advantage of them now to help you manage your finances, save money—and avail yourself of some unique deals and perks.
Union Bank is a true community bank serving the people of northern Vermont and northern New Hampshire. If you don’t already bank with us, there’s an easy way to take advantage of our excellent debit card benefits. Open a personal checking account today at a branch near you and learn more about the potential added value of your Debit MasterCard.