4 Ways to Save Money While Using Your Debit Card
Sep 2, 2020 8:22:00 PM
A debit card can give you a fair amount of financial freedom and spending power. Just like credit cards, they offer the convenience of not having to pay with cash. You can use them to make both in-store and online purchases or withdraw money from automated teller machines.
Unlike credit cards, however, debit cards work by drawing funds from an account that you already own, such as a savings or a checking account, instead of a line of credit from your financial institution. As such, it can be all too easy to dip into your savings when you use your debit card irresponsibly.
To help you prevent this from happening, we’ve compiled a list of ways you can save money while using your debit card. Read on to find out more.
Understand Your Debit Card’s Terms and Conditions
Like credit cards, debit cards can be a great way to earn points and reap rewards, provided that you get one that implements such programs. That’s why it’s important to be discerning about the debit cards that you’re offered before choosing one to use.
In addition to understanding its terms and conditions, you’ll want to take a closer look at a card’s rewards program. Specifically, you’ll want to check its qualifying criteria, how and when the rewards are distributed, and the reward limits.
It’s also a good idea to know the difference between a rewards program and a cashback program. If you see yourself shopping with your debit card often, a cashback program might be more valuable and useful to you than perks and rewards, as it allows you to earn a percentage of money back with each purchase.
Avoid Fees and Service Charges
Unlike credit cards that often come with annual fees, late payment fees, interest, and other costly charges, debit cards typically have few or no fees attached to them, making them an attractive option to those who value convenience but don’t want to pay extra for the privilege.
Debit cards also give you the ability to withdraw funds from automated teller machines or ATMs whenever you need it. However, access to cash on demand does have its price—if you withdraw from an unaffiliated ATM, that is. You may be charged an ATM operator fee, a non-network Fee, or an international fee, depending on the machine you withdraw your cash from.
Thankfully, you can avoid being charged these miscellaneous ATM fees entirely simply by being smart. If you know that you’re going to need cash, simply visit an in-network ATM operated by your financial institution ahead of time to get it. You can also withdraw cash less frequently but in larger amounts.
Stick to A Sensible Budget
Having easy access to all of your money with a debit card sounds awesome at first, but it can be detrimental if your goal is to save. Left unchecked, it can be all too easy to drain your savings or checking account if you keep using your card to pay for every small purchase. From there, it’s only one small step towards having to pay additional overdraft fees, which we definitely want to avoid.
The best and most effective way to save money and still enjoy life’s little indulgences is to have a budget and stick to it. One of the most popular budget plans is the easy-to-follow 50/30/20 plan, where you allot 50% of your income to your needs and necessities, 30% to your wants, and 20% to savings and debt repayment. Having trouble sticking to your budget? It might sound roundabout, but consider withdrawing that 30% for your wants in cash and spending that instead of swiping your card. When you run out, that’s it. You’ll have to curb your spending until next month. Having a visible and tangible reminder of your money running out might also make you evaluate your spending habits altogether.
Use An E-Wallet Instead
Still finding yourself dipping into your savings despite having a budget in place? Perhaps it’s time to set harder limits. Instead of using a debit card connected to your savings or checking account to pay for all of your purchases, you might want to consider opening an e-wallet account instead. Here are a few advantages of using an e-wallet:
- You can enjoy all of the same conveniences afforded by a debit card, including cashless payments and wide acceptance across retailers
- It puts more distance between your money and the point of sale, and thus is a more secure mode of payment
- You only need to add as much money to your e-wallet as you think you’ll need, allowing you to leave your savings untouched
- Some e-wallets in the Philippines offer virtual and physical cards that you can use to make purchases online and in-store, as well as withdraw cash from ATMs should you need it
- You can easily monitor your running balance, as well as all of your transactions, through the e-wallet app
Having a debit card is great, but like any financial tool, it’s one that should be used prudently and judiciously. With great financial power comes great financial responsibility! With these tips, you can foster good money habits and use your debit card more wisely.