Are you in the process of deciding whether to get a credit or a debit card for yourself, or for your son or daughter who is going to be leaving town to attend college? In this article I will present three reasons why using a debit card is preferable for most transactions, from a broader perspective of an individual carrying the card, from the perspective of the bank, and from the perspective of the merchant.
When you finish reading, you should have a better feel of what benefits there are for you when you decide to get a new debit or check or bank card, especially a debit card with a cash back built in.
Getting debit card cash back - one of the incentives for getting a debit card for an individual
The main reason why a consumer would want to use a bank card is because it encourages prudent spending. Short of having an overdraft allowance on your checking account, it becomes impossible to spend more money than is held in your checking account. This simple fact encourages thoughtful spending. It also makes one appreciate more of what one already has in one’s possession.
But now there are more incentives to get a bank card. Banks are working hard, competing for your business. In the recent years, they came out with several types of incentives for the check card holders, such as checking account sign on bonuses. Most recent, and apparently the most successful incentive is debit card cash back, or check card rewards card: based on the total amount of money spent each month, you are eligible to receive 1%, 2%, 3%, or even 5% reward on all the money spent that month through your check card in certain common categories, such as gas, groceries, and even your favorite cup o’ Joe at Starbucks.
Incredibly so, the incentives and rewards for check card users are approaching those of the best credit cards available.
Merchant’s perspective on debit card rewards payments
The merchants love to accept check cards since, through PIN based transactions, they incur a very modest, $0.10 transaction fee or similar. With a so called “credit” transaction through your cash back ATM card, they, however, incur a much higher fee of $0.30 + 3% of the purchase value, or thereabouts. A big difference. As much as the merchant dislikes paying these fees, as long as they bring in a new customer who wants check card cash back, the merchant will profit from the idea of cash back ATM card still.
Bank’s perspective on debit card cash back
Based on the aforementioned fees, banks would love to have you switch from the credit card transactions to “credit” type check card transactions. Why? First, there is no credit risk in it for them. While a credit card charge always carries a risk of not being paid back, a check card “credit” transaction carries no such risk, yet it still provides the 3% transaction fee for the bank. Check card “credit” transaction is like a free lunch for the bank. That is why banks are happy to provide 3% and even 5% cash backs on selected merchandise. Together with other fees that come up, they will make the profit. 카드 현금화
What do you think? Do the advantages of financial accountability and new debit card rewards tilt the scale on the side of getting a new debit card instead of a new credit card?