Debit cards, also known as check cards, have both positive and negative points. Debit cards look like credit cards, but they are linked directly to a checking or other bank account. They can be used similarly to credit cards to make purchases, or they can be used to withdraw cash from an ATM.
Obtaining a Card
One positive of debit cards is that they are easy to obtain. They are often issued automatically with a new checking account. so there is no credit check that would disqualify you from obtaining a card. The negative side of this is that you are limited to accessing funds available in your bank account--there is no additional credit available.
Debt Managment
Since a debit card is linked to a checking or other bank account, it is very easy to control spending and avoid going into debt. Unlike a credit card, with a debit card you only have access to the money in your account, so no monthly payment is required to maintain a debit card.
Fees
If a debit card is used and the account is overdrawn, a bank may charge overdraft or insufficient funds fees. The amount of these fees varies by bank. In addition, banks may charge fees if the card is used at another bank's ATM. Some banks also charge a fee if the card is used to make a purchase using a PIN rather than a signature.
Liability
If your card is lost or stolen, you may be liable for some of the funds taken. According to the New York State Banking Department, you are responsible for $50 of lost funds if you report your card stolen within two days. If you report the missing card within 60 days, you are responsible for up to $500. If you do not report the card stolen within 60 days, you may lose all money taken from your account.
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