No Cash? No Problem with Your Debit Card.

If you still view your debit card as only an ATM card, consider some of the advantages of using it for daily purchases. We’ve listed some of the most popular benefits below.

1. Supreme Convenience and Worldwide Acceptance

With a debit card, money is deducted from your bank account (almost always your checking account). A hold is put on the purchase amount by your financial institution and the money that’s placed on hold pays the merchant in a process that can take anywhere from a few hours to several days. Debit card transactions are very similar to writing a check (but faster!). Which is why one of the best reasons to carry a debit card is the supreme convenience it provides, including:

Automatic deduction of payments

When you use your debit card, cash is deducted from your checking account and sent to the merchant. Just log on to your financial institution’s website or mobile banking app to view your transactions. Some institutions display the pending transaction immediately; others will display the transaction once it fully posts to the account. (Your “Available Balance” should always show your correct balance, and account for any transactions that haven’t posted yet.)

Nationwide/Worldwide acceptance

Debit cards have quickly become one of the most widely used payment across the globe. (Similar to a credit card, merchants outside the U.S. may charge a foreign transaction fee.) 

Quick and easy cash withdrawal

If you need cash, access an ATM and quickly withdraw the funds you need. Just be sure you understand the various fees that may be involved with withdrawing cash from an ATM provider. Some checking accounts offer in-network ATMs with no fees, other checking accounts will reimburse you for using an out-of-network ATM. Most have some type of fee for withdrawing cash overseas. [Quorum offers three checking accounts: 1) QClassic, which allows you to access over 90,000 ATMs nationwide; 2) QBoost: access to that same network, but non-Quorum ATM fees are reimbursed up to $20/month; and 3) QFlex: all non-Quorum ATM fees are refunded. Click here for more information.] 

For even greater convenience, you can add your debit card information to your phone’s digital wallet (like Apple Pay, Android Pay or Samsung Pay). All you have to do is swipe or tap your phone at checkout to make a purchase: no physical card required.

2. Debit cards mean you’re only spending what you have available.

Using your debit card to make a purchase is as simple as using your credit card; but, because the money is coming directly out of your checking account, you’re only spending what you have available. You’re not putting off paying for things until later or accumulating interest if you don’t pay your balance in full, which is an easy habit to get into with a credit card—and one that can wreak havoc on your budget. Here are a few other important factors to consider:

Credit history and credit scores

To receive a credit card, financial institutions will perform a credit history check. If you have poor credit or no credit history, you may not be able to obtain a credit card, or will only receive one with a high annual percentage rate and low credit limit. To receive a debit card, you simply need to be approved for a checking account.

Control your spending

Debit card purchases pull funds directly from your checking account. If you spend more than what you have, you’ll likely get hit with an overdraft fee, or the transaction will be denied and subject to an insufficient funds (NSF) fee. To avoid this, transactions should be monitored carefully, and a proactive approach to budgeting taken. When you can spend more than what you have in your account with a credit card, the balance can quickly add up. (see example below).

Avoid credit card debt and rising interest rates

Carrying a balance each month on a credit card can add up without a disciplined approach. For instance, let’s say you’re in the market for a new smart TV for your home or apartment. If you use a credit card for this purchase, your payments may look something like this:

• • Initial purchase amount: $1,000
  • Annual Percentage Rate: 18%
  • Credit card minimum monthly payment for this purchase: $25.00
  • Total time to pay off balance and interest: 113 months (around nine years)
  • Total cost of your purchase: $1923.18

These numbers do not even take into account a rising interest rate environment, and also assumes you do not make any additional purchases with this credit card. If you did, and only sent the minimum monthly payment, the debt incurred would be difficult to eliminate.

If you missed a minimum payment or could not afford to make your payments, your credit score would suffer considerably, and it would potentially affect your future options to purchase a car or home.

3. Debit cards can help you stick to your budget.

If you use your debit card primarily as an ATM card to get cash and use the cash for purchases, it can be very easy to go through it and not remember exactly where it went (especially if you have kids or a spouse who regularly take money out of your wallet). (If you want to keep a little cash on you at all times, many retailers will let you add a small amount to your debit purchase so that you can get cash back.)

When you make a purchase with your debit card, on the other hand, the transaction is posted in your checking account activity, often immediately.

Most financial institutions will sort your debit card transactions into commonly used categories such as:

• Automotive repair/maintenance: Includes tire rotations, oil changes, fuel, tolls, etc.
• Groceries/restaurants: This category will help track your monthly food expenditures.
• Health and beauty: Includes haircuts, nail salons, massages, etc.
• Home maintenance: Trips to the hardware store for gardening equipment, light bulbs, etc.

Instead of keeping track of mountains of paper receipts, save time and allow your financial institution to total expenditures for each category for you.

There are also many free budgeting software options available that make tracking your money and purchases easy, including apps you can install right on your phone. These apps allow you to easily record each purchase. You can also review and track how much money you’re spending in various categories (food, entertainment, office supplies, etc.) and in specific locations (like particular stores or restaurants).

4. It’s easy to avoid overdraft issues.

You may be hesitant about using debit cards because you’re afraid you’ll accidentally overdraw your account. That doesn’t have to happen. Here are some other simple tools and precautions that can help you avoid overdrawing your checking account:

Card Alerts

When more than one person has a card linked to the same checking account, you can keep tabs on the account balance by setting up phone, text or email alerts through your financial institution and/or your tracking program) to notify you if the balance drops below a specified amount, if a transaction over a designated amount occurs, if the card is used outside your area, etc.

Alerts are useful if your spouse forgets to tell you when they’re using the card or if you gave your child a card to use in an emergency. However, alerts (particularly for low balances) are worthwhile for everyone to have—and they’re free!

Overdraft Protection

If you add overdraft protection to your checking account, such as a Checking Reserve Line-of-Credit (as there are different levels of overdraft protection), you can avoid accidentally overdrawing your account. If a check or any type of debit would cause your account to go into a negative balance, funds are automatically transferred into the account to pay it.

Always Get Receipts

You should receive a receipt for any debit card transaction you make. Hold on to that until you see that the transaction has posted correctly to your account. If you don’t get a receipt for some reason (as happens at gas pumps from time to time) or it’s illegible, jot down the amount of your purchase. In nearly all cases, debit card transactions post accurately. However, it’s always wise to have a receipt or other record of your purchase.

5. Debit Cards Have Enhanced Security and Fraud Monitoring

Identity theft has become one of the top concerns among consumers in the digital age. Fortunately, debit cards offer enhanced security through the use of a Personal Identification Number, or PIN. Additionally, a routine review of your transactions via your financial institution’s website or mobile app can help quickly identify and report fraudulent charges. (Most will offer notifications to alert you of activity on your account). Be vigilant of your accounts; while federal law limits your liability for unauthorized charges, your liability depends on when you report the charges. If you report fraudulent activity more than 60 days after receiving your statement, you’re liable for every dollar spent and all fees incurred.

Security also means protection for purchases you may have bought yourself. Many debit cards offer extended warranties, purchase assurance, and price protection, similar to credit cards. (Be sure to consult your Guide to Benefits to learn exactly how you are covered.)

6. Debit Cards May Help You Qualify for Checking Account Benefits

Using your debit card could also help you earn more from your checking account. Many credit unions and banks offer rewards or higher interest rates when you meet certain activity requirements, like making a set number of debit card purchases each month. That means every swipe could bring you closer to perks like bonus interest, cashback, or fee waivers—just for using the card you already carry.

Some simple safety precautions:

What if your card is lost, stolen or accessed by an unauthorized user? Notify your financial institution immediately. They can shut down that card and issue you another one. They can also begin an investigation if you believe the card or PIN was stolen.

Don’t make it easy for an unauthorized user to get cash using your card. Choose a strong PIN (something difficult for others to guess or remember) and don’t share it with anyone. No one in a store or even at your financial institution should ever ask you for your PIN. Never have it written down on or anywhere near your card.

Most card terminals have privacy shields for when you enter your PIN. However, always exercise basic caution to make sure no one’s looking over your shoulder.

It’s also important to sign the back of your card as soon as you receive it (it’s actually not valid if it isn’t signed). Your signature also creates an additional barrier between your money and a would-be thief. For more safety precautions, click here.

Sometimes checks are still necessary (and even the best choice).

There are times when you still may need to write a check. Maybe your child’s soccer league requires checks for their dues. Some smaller service providers—like landscapers, handymen and dog walkers—only take cash or checks. When you write a check, just remember to record it wherever you track your checking account transactions. [Note: Quorum’s FREE Bill Pay service will send out checks on your behalf!]

Checks can be the best choice if you need an easy way to show that a payment was received and processed. Most financial institutions provide images of both the front and back of checks once they’ve cleared the recipient’s account.

Just remember that depending on where the recipient takes the check and when, it could post to your account within a day—or not for weeks. Never write a check in anticipation of having the funds in your account by the time it reaches your financial institution. We’ve probably all done this at one time or another, and usually it works out fine. However, if it doesn’t, it can cause a lot of problems—like bounced checks and overdraft fees.

It’s wise to incorporate debit cards into your financial life, along with cash, checks and credit cards. All have their advantages in different situations. By being a smart debit card user, you can increase your spending flexibility and still keep a close eye on your money.