Debit cards
When you buy goods or get cash with a debit card, the money is
taken from your bank account right away. With a
credit card you get a monthly a bill. If you don't repay the
amount owed in full on a credit card or if you take out cash, the
charges are very high.
How debit cards work
Debit cards are linked directly to your bank account. You can
use them to buy goods or withdraw cash and the amount is taken from
your account right away.
You can also use debit cards to get "cashback" from certain
shops (you buy goods and also ask for money back from the cashier).
The total amount is deducted from your account right away.
When using a cash machine or paying for goods with a debit card,
you'll need to enter your personal identity number (PIN). When
buying goods, you usually enter it into an electronic hand-held
device but in some cases you may have to sign.
Most bank accounts offer debit cards. Most debit cards double up
as cheque guarantee cards, guaranteeing that your cheque will be
honoured by your bank up to a stated amount.
What happens if there's not enough money in your
account?
This will depend on the type of debit card you have:
-
if you have a Solo or Electron debit card, the balance in your
account is checked before each transaction – if there’s not enough
money you won’t be able pay or withdraw cash with the debit card
without prior agreement;
-
if you have Switch, Visa or Delta card, your account balance
won’t necessarily be checked and the payment may still go
through.
If you go overdrawn, the charges you’ll pay will depend on
whether or not you have an authorised overdraft arrangement with
your bank. If you do, you’ll pay the agreed amount of interest at
the end of each month. This is usually much lower than interest
charged on credit cards.
If you don’t have an overdraft agreement or you exceed the
agreed limit, your bank may allow the payment to go through but
you’ll usually pay much higher fees than if you had an agreed
overdraft.
Using a debit card over the phone or
internet
Debit cards can be used to make payments by phone or over the
internet. In this case, you'll need to provide certain details that
are printed on your card.