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Why a debit card?

Debit cards have become consumers’ first choice of payment.

Debit cards were used to make 7.7 billion purchases in the UK to the value of £337 billion in 2012.

Debit cards can be used to buy goods and services or to withdraw cash from your bank account, as well as using debit cards to get cashback from certain shops.

Advantages

The main benefits that debit cards can provide are:

  • A safe and convenient way to pay for goods and services, particularly over the internet, by telephone or by mail order, both in the UK and abroad.
  • Access to funds in your bank account from cash machines globally.
  • You can get cashback from certain shops - your card is charged for the total cost of goods plus the cash amount.
  • Protection against fraud - if you are the innocent victim of fraud you will not be expected to pay. See Financial Fraud Action UK to find out more about how to protect yourself against fraud.
  • Debit cards do not usually have transaction fees associated with them – and if you choose one that does not have an account management fee, then in general in the UK, debit cards can cost nothing.

As you’re accessing funds directly from your current account rather than credit (unless you are using an overdraft facility), a debit card can be a good choice for anyone concerned about getting into debt.

Your current account can usually be managed either over the phone or online – and in most cases in bank branches.

Disadvantages

While there are not really any direct risks associated with using a debit card, there are a couple of scenarios where you may find another form of card is appropriate:

  • In an emergency situation you may need access to more funds than you have available in your current account – and a credit card may be the most convenient form of short-term borrowing (up to your credit card limit).
  • If your debit card is not one that goes online for every transaction, if you make a transaction that takes you over the available funds in your account it may be possible for you to accidentally go overdrawn on your account. It is important to make sure you manage your account appropriately, as you may be charged for being overdrawn. 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 a pre-authorised overdraft.
  • Debit cards do not provide the same level of legal protection as you would have when using a credit card (see Section 75 of the Consumer Credit Act) though many debit card issuers offer protection on a voluntary basis (it is worth checking with your debit card company what level of protection they offer).
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