Debit Card: Benefits, Types, Best Debit Cards and More
A Debit Card is a popular type of money that many of us carry with us. As digitization has increased rapidly over the past few years, plastic and electronic money have become very famous. A Debit Card is one of the most popular and widely used forms of plastic money.
When it comes to a cashless society, Debit Cards are your pals. You can avoid carrying rolls of cash wherever you go by using this. Almost as simple as using money, using a Debit Card is more secure and safer. They are helpful anytime and anywhere.
Debit Cards are compatible with various mobile payment systems, including Apple Pay, Samsung Pay, and Google Pay, as well as with cash registers, ATMs, and numerous money transfer apps, including Venmo and Cash App.
In this blog, we've compiled a comprehensive overview of Debit Cards, along with all the essential details about them that everyone should know.
So continue reading to discover the wonders of a Debit Card!
Understanding Debit Card
Debit Card Definition – A Debit Card is a prevalent type of plastic money that gives you electronic access to your savings account at any bank.
The access is generally via ATMs. For example, suppose you swipe your Debit Card to pay a bill in a restaurant. Now, the concerned amount can only be used if it is already in your bank account when swiping the Debit Card. This is contrary to Credit Cards, where money can be accessed in advance and paid later.
These days, a debit card is readily offered when opening a new savings account, even without applying for one.
There are four significant debit issuers Cards worldwide – American Express, Discover Card, Master Card, and Visa. In addition, some country-specific Debit Card issuers are - UnionPay in China, RuPay in India, and Maestro in the United Kingdom.
How Are Debit Cards Beneficial? Let’s Find Out
- Debit Cards give you access to instant cash because they are almost universally accepted at ATMs.
- Additionally, it reduces costs associated with handling large amounts of cash and helps merchants swipe Debit Cards on point of Sales (PoS) devices.
- Banks encourage using Debit Cards by providing a range of incentives, including cashback deals, bonus points, free movie tickets, and more.
- Using Debit Cards instead of carrying cash makes it easier to keep track of your spending. In addition, they provide practical features like email and SMS alerts with information on every transaction.
- In contrast to a Credit Card, it promotes frugal spending. Only funds that are currently in your savings bank account may be spent.
- Unlike in the case of a Credit Card, here you cannot spend in advance, and thus it reduces the risk of irrational spending.
Types of Debit Cards in India
We categorize Debit Cards in this segment according to their technology, usage, and payment platform. But first, let us examine the various types of Debit Cards.
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Visa Debit Cards
A Visa card is a payment card branded by Visa and operates on the Visa network. The company started only with Credit Cards but has since expanded to include Debit, prepaid, and gift cards.
Even though Visa cards bear the Visa logo, they are not issued by the company.
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MasterCard Debit Cards
Debit Mastercard is a Debit Card brand offered by Mastercard. They use the same structures as standard Mastercard credit cards but do not provide the customer with a line of credit, instead relying on funds in the customer's bank account.
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RuPay Debit Cards
Rupay Card is a domestic Indian card created and initiated by NPCI in 2012. This card was launched in the Indian payment strategy to eliminate the monopoly of foreign gateways such as Visa and MasterCard because these are foreign or American companies with high commissions, resulting in a high transaction cost.
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Contactless Debit Cards
In a wireless financial transaction known as contactless payment, the customer approves monetary compensation for purchase by placing a security token close to the merchant's point of sale (PoS) reader. Chip-enabled bank cards and smartphone digital wallet apps are standard security tokens for contactless payments.
Other names for contactless payments include touch-free, tap-and-go, and proximity payments. Frictionless checkout is the term used to describe a transaction in which goods or services are purchased using contactless payment.
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Maestro Debit Cards
Mastercard offers Debit Cards under the Maestro brand. Both in-store and ATM cash withdrawals are possible with Maestro cards. In addition, based on the associated bank, most Maestro cards also support online transactions.
Credit Card Vs Debit Card
You need to understand this fundamental concept. There is a critical distinction between the two.
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Credit Card |
Debit Card |
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Credit Cards are borrowed funds issued by banks. |
In Debit Cards, the money is subtracted from your bank account when used. |
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In Credit Cards, interest rates and fees range and differ. |
In Debit Cards, there are no interest rates. |
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Credit cards can provide benefits such as rewards, discounts, and travel points. |
Debit Cards can help you avoid debt accumulation. |
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Excessive compulsive spending through Credit Cards can lead to debt. |
Debit Cards do not assist you in building credits. |
Debit Cards access the funds held in the cardholder's bank account. On the other hand, a Credit Card is a loan or credit a bank gives. It is comparable to taking out a bank loan and paying it back over time.
On timely repayment of the amount borrowed using a Credit Card, no interest will be paid.
Fees & Charges Associated with Debit Cards
All banks charge some fees for providing the services of a Debit Card. As a Debit Cardholder, knowing the various charges that could be levied on using the debit card is essential.
Some of the standard charges associated with Debit Cards are:
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Annual Maintenance Fee
As the name suggests, annual maintenance is a yearly fee charged to the customer for using the Debit Card. It could range from ₹ 100 to ₹ 500 in most cases. However, this charge varies from bank to bank and also depends upon the type of Debit Card.
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POS Fee
This is a unique charge for fuel-based transactions. Usually, no extra charge is levied upon the cardholder for making purchases through the Debit Card. However, only when the Debit Card is used for fuel-based transactions an additional surcharge is set at the rate of 2.5%.
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Card Replacement Fee
As the name suggests, a card replacement fee is charged for replacing your Debit Card with a new one. The charge for the replacement of the debit card may vary from one bank to another. It also depends upon the relationship of the bank with the client.
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Duplicate PIN or Regeneration of PIN Fee
This charge is levied in case the cardholder forgets their PIN. A duplicate PIN is sent to the client (either electronically or physically), and a nominal fee is charged for this service.
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Transaction Charges
Different banks have different policies as regards levying charges based on a number of transactions. But, the transactions made on the same bank’s ATM are usually free.
However, there is a specific limit on the number of free transactions per bank from other banks’ ATMs. Therefore, a nominal charge is levied per transaction if the specified number of free transactions is crossed.
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International Transaction Charges
As the name suggests, international transaction charges are levied on using the Debit Card for cash withdrawal in foreign countries. Varying from one bank to another, these charges may be percentage-based or a flat specified transaction fee.
Do's and Don’ts of Using a Debit Card
Debit Cards use technology to facilitate paperless transactions. However, everything related to technology comes with the risk of misuse or fraud. In this regard, special care needs to be taken as to the usage of the debit card.
Let us have a look at some of the fundamental yet essential do's and don'ts related to the usage of the Debit Card-
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DO’s of Using a Debit Card |
DON’Ts of Using a Debit Card |
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Report Loss of Your Card In case you lose your Debit Card, you must immediately report the loss of the card to the concerned bank. The second step is to stop all transactions from the concerned card and block the card from future misuse. |
Don’t Use Unsafe Online Platforms Don’t use your Debit Card on websites that are not authentic. Many websites are made to extract your personal account details (including PIN) and steal money from your account. |
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Follow SMS Alerts Setting up SMS alerts for each transaction made using the debit card is advisable. This will ensure safe usage and help you track your Debit Card spending. |
Don’t Cause any Physical Damage to Your Debit Card Mishandling of the Debit Card could destroy or harm the magnetic stripe or the chip in your Debit Card. A typical example is exposure to sharp objects or magnetic materials. The physical damage can harm the technology in the Debit and render it useless. |
Best Debit Cards in India
Let us have a look at a few of the best Debit Cards:
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ICICI Bank Coral Paywave International Debit Card
The ICICI Bank Coral Paywave International Debit Card is a revolutionary Debit Card that allows you to make faster, contactless payments. It also promises superior value through exciting shopping, entertainment, and other features.
The Coral Paywave Debit Card unlocks a world of convenience, security, and speed. This Debit Card is thus regarded as the best debit card.
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HDFC Bank RuPay Premium Debit Card
The HDFC Bank RuPay Premium Debit Card has features and benefits that allow you to save money no matter what you spend. For example, you will receive a 5% CashBack and a 1% Fuel surcharge waiver when you use the card to pay your dreaded utility bills. In addition, the card provides you with a Personal Accidental Death/Permanent Disability cover worth up to Rs. 2 lacs.
The RuPay Debit Card is intended for use on Indian websites, merchant outlets, and ATMs. However, it is not intended for international use; therefore, if you want a card that can be used internationally, you must go to a bank branch and request a Visa / MasterCard Debit Card.
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Kotak Bank PayShopMore International Chip Debit Card
The Kotak Bank PayShop More Debit Card is a visa card and one of Kotak Bank's most customer-friendly and beneficial debit cards. The card allows you to shop conveniently and cash-free at over 30 million stores in India.
The card can be swiped smoothly on both websites and mobile apps. Furthermore, you can use your card for shopping even when travelling abroad.
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Axis Bank Burgundy Debit Card
This premium Debit Card by Axis Bank gives users higher daily withdrawal and purchase limits. Moreover, it provides a new ‘contactless’ feature for a faster and safer shopping experience.
It is one of the selected few cards that allow free ATM withdrawals from any bank’s ATM worldwide. Not only this but this Debit Card also provides complimentary movie tickets and access to exclusive airport lounges.
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SBI Platinum International Debit Card
The Platinum Debit Card from SBI is available in Visa and Mastercard versions. Aside from the convenience of cashless transactions and ATM withdrawals, the card provides numerous customer benefits. The card also includes a 5-lakh insurance policy. The State Bank of India Platinum Debit Card provides customers access to cashless transactions and ATM benefits.
The card is issued in collaboration with either VISA or MasterCard. This debit card is ideal for heavy spenders due to its high transaction and withdrawal limits. In addition, cardholders can earn reward points while shopping through the State Bank Rewardz Scheme. Hence, this card is another card regarded as the best Debit Card in India.
Conclusion
Debit Cards have become an essential part of our daily lives. The responsible and efficient use of Debit Cards greatly simplifies our transactions. In addition, it is very portable and simple to use, and it is accepted in most places via Point of Sale (PoS) machines.
A Debit Card's primary feature is that it Debits Funds directly from the cardholder's bank account.
This is what sets it apart from a credit card. Users can choose from various debit cards based on their requirements and convenience. In addition, they come with a slew of intriguing advantages and rewards.
Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.
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Research Analyst - Himanshu Sinha