Pay with Debit Cards…Debt-Free, Good for the Heart

12-07-2018

People start looking for other methods to enhance their purchasing capacities when they enter into the working age and most of them think of credit cards and cash cards, instated of debit cards. If the comparative study on characteristics of each card type is conducted, we will find only a few differences among them. However, using debit cards for cash advance is free of interest charges.

items
Credit Card
Cash advance card
Debit card

Annual fees

Depending on a card issuer

Depending on a card issuer

Depending on a card issuer

Cash Advances

Yes

(considered as
a loan)

Yes

(considered as
a loan)

Yes

(considered as
a withdrawal)

Purchasing Goods & Services

Yes

Depending on a card issuer

Yes

Interest Charges

Yes (for late payment or paying the minimum amount due

Yes

(from the date of the cash advance)

No

Limitations of Application

Minimum income requirements

Minimum income requirements

No requirement

The above table shows that the key difference of a credit card, cash card and debit card is “debt burden”. A debit card is a card linked to a bank deposit account. Each transaction must not exceed the available account balance. Example advantages to limit the debit card spending include:

  • Limitation of spending amount Although a credit card and cash card are considered as a gateway to freedom of spending, a cardholder who is not undisciplined enough to control the spending may have to pay high rate of interests. Meanwhile, this is not a problem of a debit cardholder who can limit the transaction to the available account balance. An easy solution is to bear in mind that no money, no spending and avoid overdraft.

 

  • For parents or a husband who would like to make a child or a wife respectively an authorized user on their credit cards, it would be better to limit the spending to what is available in the account. This method can prevent overspending behavior.

 

  • Interest-free Going into debts can be avoided by free-interest spending. This statement is consistent with the principle of debit card spending which ensures the simplicity by limiting a transaction to the amount of available account balance. Normally, a cardholder keeps updating the balance available in a bank account, so he/she can estimate how much it should be for each purchase. Using a debit card makes spending more conscious than using a credit card, despite of the same goal which is to get cash advances for promptly and comfortably spending.

 

  • Cashless wallet carrying cash is risky, especially for Thailand in the era of stepping towards the policy of Thailand 4.0, where the people are more stimulated to pay for goods and services with a debit card. Cardholders can obtain double rewards in respect of benefits and privileges from various marketing and lucky draw campaigns.

 

  • If you are a kind of person who would not like to carry cash or overspend and want to control spending of your beloved persons, a debit card is a good solution which is beneficial to simplify the financial management and unconsciously shape the behavior of disciplined spending.

 

  • Moreover, applying for a debit card is extremely easy as there is no any requirement of the minimum income, only linking to the bank deposit account. Besides, in the future, debit cardholders can receive benefits from the E-payment policy currently launched and supported by the government.

 

  • Nevertheless, everyone should have understanding of spending and knowledge of pros and cons of each type of payment card in order to find the one that best suits the lifestyle and need.

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