perks and dangers of debit cards perks and dangers of debit cards

Debit cards: everything you want to know about the perks and dangers of getting one

In a world that is becoming more and more cashless each day, card payments are becoming an everyday thing. And while not everyone has the required score to qualify for a credit card, you might get a debit one. Here's what you should know.

A debit card is essentially linked to your checking account. Understanding the key features of a debit card can help you determine which one is right for you.

How do they work?

How do they work?

Debit cards can be used to make purchases or withdraw money at an ATM, without having to write a check or carrying cash. The main thing to understand about debit cards is that when you withdraw money or when you make a purchase, unlike credit cards, money comes straight from your checking account. As you are not borrowing money —because you are using the money you already have, you won’t incur debt.

You use them just like a credit card, swiping the plastic in a merchant’s card reader, and entering the PIN you received from your bank. If the transaction is approved, a pre-authorization will be placed on your checking account balance by the amount of the transaction. The transaction will show “pending” until the money is transferred from your account to the merchant.
As these cards are directly linked to your checking account, they usually don’t allow you to borrow money and repay later on.

However, there are certain ways for you to overdraw your account or spend more than your current balance. You can opt-in on your bank overdraft protection service, so you will be able to spend more up to a certain amount. If you decide to go for this option, the bank will charge you an overdraft fee of $35 for each transaction that they pay into negative.

A good way to avoid these fees is by keeping a running balance of your checking account, so you know how much money you have available at any given time.

Security Measures

As it is linked to your checking account, you need to take some precautions when it comes to safeguarding your debit card. This way, you ensure neither the card nor the information associated with it is stolen.    

If you lose your card or it is stolen, contact your bank immediately. Under federal law, you can’t be held liable for any unauthorized charge after you contact the bank.

Which are the best prepaid debit cards?

Which are the best debit cards?

If you are trying to change your spending habits and save more money, then you should consider having a prepaid debit card. These can be used to make your purchases just as you do with any other credit or traditional debit card.

The main difference is that with prepaid debit cards you will be in control of your balance, as you will have to load it onto the card before you spend it. When you get out of money, you won't be able to make any further spending.

So, if you are interested in getting one of these cards, you can check the best options here!

Best prepaid debit cards of 2020

Brink's Prepaid Mastercard®

This card offers safety and security with the Brinks brand and protects you from unauthorized transactions.

Among its main benefits, this card offers faster payments by using Brink's Direct Deposits and security. You will require card activation and identity verification, and terms and fees will be applied.

Bear in mind that this card has a higher monthly fee than other prepaid debit cards. However, if you choose the pay-as-you-go plan, you won't need to pay monthly fees, you will only be charged $1 per withdrawal and $2,50 per ATM withdrawal.

NetSpend® Visa® Prepaid Card

If you are looking for an understandable fee structure card, this is a great option! You can either pay as you go or make unlimited transactions with no additional fees.

The great benefit of this card is that it doesn't count on overdraft fees on your purchases. Moreover, you can use the Netspend Mobile App to handle your card account.

This card count with 3 separate plans:

Pay-As-You-Go - Only charges when using your card.

Fee Advantage Plan - It has a $9.95 monthly fee and free unlimited transactions.

Reduced Monthly Plan - It has a $5 monthly fee and free unlimited transactions.

Paypal Prepaid Mastercard®

Besides its peer-to-peer money transfer service, PayPal now offers a prepaid debit card. It's actually a great option to access your PayPal cash instead of waiting for it to get transferred to your bank.

One of the great benefits of this prepaid card is that you can get personalized offers and even earn cashback by using it. However, bear in mind that it charges a $4.95 monthly fee.

MOVO Virtual Prepaid Visa Card

It's quite easy to acquire this option and it's almost free to use. Issued by Metropolitan Commercial Bank, this card is quite a solid choice and it can be easily obtained by downloading the app and just opening an account. Your card will arrive within the following 10 business days.

Other highlights of this card are that it doesn't have any monthly fees and you won't pay fees for activation or inactivity. You can also withdraw cash for free from 6,000 ATMs across the country and will pay a $2 fee for withdrawing from an out-of-network ATM.

American Express Serve®

If you want an American Express card, this is a great option! It only has a few fees and plenty of reload options. Also considered a great card for families, this is a low-fee alternative to the traditional accounts.

It has a $6.95 monthly fee, but it can be waived if you use direct deposit and load $500 onto your card on a monthly basis. Moreover, you can load your cash for free at CVS and 7-Eleven stores!

Regarding withdrawals from ATMs, you can do it for free at over 24,000 ATMs nationwide, so it's a considerably good option.

The dangers of debit cards

The dangers of debit cards

Do you prefer debit cards over credit cards? Although debit cards seem to be 100% safe, there are some dangers you should be aware of.

Take a look at these downsides of debit cards and learn how you can avoid them.

Fraud protection

You would never want your wallet to fall into the wrong hands, especially if you have a debit card. It doesn't have fraud protection as strong as credit cards do. If your debit card is stolen and used, the thief can drain your bank account and you won't get your money back until your bank completes its investigation.  

Building credit

Unlike credit cards, debit cards don't have an impact on your credit story. So, if you are trying to rebuild it, this card won't help you.

However, debit cards can be handy when you forgot to pay your credit card balance and you don't want to keep using it and damaging your credit report.

Merchant mistakes

Have you ever paid lunch with your card and then found out that the cashier typed the wrong amount and overcharged you? When this happens with credit cards it's easier to solve. However, when you pay with a debit card (and this happens) you may end up facing some problems.

If there's a dispute you will probably end up in a weaker position when you use debit cards.

The merchant will probably return the money once you report the problem, buy it will take several days until the money is returned to your account and you may, therefore, face overdraft fees until you receive it.  


You need to always keep track of your account balance when you are using debit cards. Otherwise, you will be facing overdraft fees, which quickly add up until you pay the debt.

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