By John Campbell
Check cards play an important role in our ongoing transition to a “cashless society.” As the cashless alternative to writing checks, check cards are often used in place of hard currency.
Check cards are a step up from traditional automated teller machine (ATM) cards. With an ATM card, you can withdraw money directly from your bank account at any compatible ATM machine. Withdrawing money from an ATM machine is very simple. You simply insert your ATM card, type in a four-digit personal identification number (PIN) and withdraw the cash you need. Depending on the ATM machine you use and the type of account you have, you may be charged a small fee to withdraw money and may be limited in the amount of funds you may receive from the machine.
More commonly known as debit cards, check cards can be used at both ATM machines and any business that accepts credit cards. Depending on the type of point-of-sale card readers installed at the places you do business, you may have the option of making an online or offline payment. If you have the option of making an online payment, the card reader will have an attached keypad. Entering your PIN number into the keypad will allow for funds to be instantly debited from your bank account. A growing number of businesses actually prefer debit cards to written checks. An added advantage of having the transaction processed as a direct debit is that many businesses will allow you to debit extra money from your bank account and get cash back. Most businesses that allow you to get cash back will limit the amount you can withdraw to $100 or less.
If the card reader at point-of-sale doesn’t have the equipment for entering in a PIN number your transaction will be processed like any other credit card transaction. In fact, most debit cards today sport the VISA or MasterCard logo. When these offline payments are processed you’ll have to sign a credit card receipt. The transaction is processed by your card’s associated credit card company and is listed as pending with your bank for 2 - 3 business days. Once that time has passed the funds will be debited from your account to cover the transaction.
Although they’re functionally similar to any credit card you shouldn’t have the added burden of going further into debt if you use a debit card responsibly. With every debit card charge directly draining your bank account of funds, you’ll need to avoid making excessive charges or you could wind up with a bank account containing a negative balance. If you have a tendency to “charge it” more than you should, a debit card may not be ideal for you.
If balancing your checkbook is second nature to you, a debit card may be a very useful tool. All you’ll likely need to qualify for one is an account in good standing at the bank in which you want to get a debit card from. You won’t even need to undergo a credit check to qualify. Generally, the types of debit cards you may be offered may be determined in part by how much money you have saved with the bank and the types of bank accounts you have opened. If you can avoid it, steer clear of debit cards with monthly fees or pricey fees per transaction.
For many consumers, debit cards have all but made the cashless society a reality today. You’ll have to decide if you want to take the plunge today into what appears to be an inevitable future. Although cash may someday be obsolete, it’s still going strong as the No. 1 most accepted form of payment by businesses worldwide.
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John Campbell is the writer and editor of CashBuzz, A financial portal for the rest of us. Check out cashbuzz.com for the latest articles on money management and tips and tricks that can help improve your finances. This article may be reprinted on your Web site if the copyright, author information and active link are included.
