Debit Cards 101 – Basics you should know

Jan 21st, 2015     Banking

Debit cards give customers access to the money in their checking or savings accounts. Customer with debit cards can use the cards for withdrawals of cash through ATMs and for making payments at most merchant locations or online. There is a magnetic strip at the back of the debit card; this strip has encoded data that make it possible to access the funds in checking account electronically. Recently, banks have also started issuing EMV chip debit cards which are considered more secure than traditional magnetic strip.

Debit cards

How debit card works?

Customers who store their money in checking accounts are issued with a debit card. This card is usually delivered by secure mail. Customers can visit the branch and collect the debit card too. Customers will also be sent a pin number along with their debit card. After receiving the pin number and debit card, customer should go to an ATM to activate the card. ATM will request the customer to enter the pin number after inserting the card into the machine. Bank will request the customer to sign behind the debit card after receiving it. As pin number works as password, financial institutes request customers to keep it private and confidential.

Customers have the options of changing their pin number by following the instructions on the screen. It’s simple and easy to use a debit card as all the instructions will be given to you on the screen after inserting the card into the machine. Apart from making withdrawals customers can use debit cards at stores to make purchases too. At a store customer can give the debit card to shopkeeper to swipe the card in the card machine. Sometimes customers have to enter their pin number into the card machine. After swiping the card, the machine will give two receipts of bill for the purchase made. Customer should sign on them and give one to the shopkeeper and keep one with them. These receipts work as payment proof, and the transaction will appear in the statement too. Debit cards can only be used for shopping, provided the retailers have the option for the same.

Cards Swipping Machine

Debit cards can be used online to make purchases as well; online customers may have to enter the pin number to process the payment. But that’s not the case with all transactions. Sometimes customers get to set up a security code through visa, maestro etc. These security codes act as passwords for making online purchases. Customers should follow the instructions on the screen and key in the required information online to make the payment successfully. Sometimes to make a payment online, you may just have to enter the last 3 digits at the back of your debit card to process the payment. This code is known as CVV, CCD and secure code. American express cards have this code on the front of the card. Usually the information required would be 16 digit card number, name, address, expiry date of card, security code etc

CVC code debit card

Benefits of debit cards

View balance: Customers with a debit card can view their balance by using their debit card at an ATM. For this the customer has to insert the card and enter the pin number on the machine, and then the customer has to select the option view balance to know how much cash is available in their account.

Safe and secure payments: Debit cards are issued to customers only after all security measures are taken by the financial institutions. Many banks call customers if there is any unusual activity on the account. If funds debited the account without customer’s consideration then the bank will run an investigation and credit the customers account if it’s proved that the customer didn’t make the payment. Visa, MasterCard, Maestro etc are famous debit cards issuers, these brands have their own security system to help customers process payment safely. Payments made via debit cards can always be investigated, any fraudulent activity can be traced due to security system set up on debit cards.

Saves time: Customers with debit cards don’t have to wait in branch to withdraw funds. Whenever customers require the funds, they can go to the nearest ATM around and withdraw funds as and when required.

Easy access to funds: If customers don’t have a debit card, they are limited to branch timings to withdraw funds. However when customers have a debit card they can use an ATM 24/7. Most of the ATM machines are open throughout without any closing or opening timings. Therefore customers have easy access to funds.

View recent transactions: Customers can check the recent transactions done at an ATM. This way customer can keep a tab on their expenses.

Transfer money to friends accounts: Some ATM’s offer customers to make payments to their friends and family after inserting a debit card.

Easy to carry: Compared to cash it’s much easier to carry debit cards. They require less space and are light in weight mostly.

Debit card rewards: Some customers get additional benefits for using their debit cards. For this they fill forms and enter contest where they cards accumulate points for making purchases at stores where these rewards are available. Later these points would give some gifts or benefits based on the contest and features offered.

Online shopping: With online shopping customers not only save their time but they also get the option of purchasing goods that are available in different parts of the world.

Therefore we see that there are many benefits of using a debit card, customers will experience different kinds of benefits once they start using them. Some banks, credit unions and online banks might offer additional benefits on debit cards such as low interest for international withdrawal and transactions. However the customers have to pay an additional fee to attain such features on a debit card.

Debit card Vs Credit Card:

The major difference between credit and debit card is that customers with debit cards use their own money stored up in the account and thus don’t have to pay any interest for using the same. However, customers with credit cards use banks or credit unions money and they have to pay interest for using the money loaned on the card.

Customers with credit cards have to make regular payments towards their credit card if any money is owned on the cards. If customers with credit cards fail to make a minimum payment as agreed in terms and conditions additional charges will be incurred on the account. Customers with debit cards don’t have any additional charges to pay until and unless they don’t go into a negative balance on the account.

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Why Prefer an Online Bank Account?

Nov 20th, 2014     Banking

Bank accounts that are mainly maintained and operated online are known as online bank accounts. These accounts are provided by online banks, which are not the same as street side banks. Bank accounts can now be opened and maintained online, without having to go to a branch. Online bank accounts have similar features as the bank accounts functioning from streets.

However the main difference is the accessibility of the accounts. Street side banks offer customers with branches and bank staff to help them maintain their accounts. While online banks provide most of the services online, they don’t have branches and customers don’t meet the bank staff personally.

Features and services provided by online banks

Tech savvy customers who use internet frequently can now make the most of online banks, as they make banking easier and simpler for customers. With online banks customers can save a lot of time, without having to visit the branch. Banking chores can now be completed by customers from any location provided they have access to internet. Below we have listed few of the features provided by online banks.

  • Easy Account Opening: Customers can open online bank accounts online via website, for this they have to log on the bank’s website and apply by filling the online application form.
  • Purchase Certificate of Deposits (CD’s): Customers can buy CD’s online through the bank website.
  • Online Bank Customer Service: If customers have any enquires they can connect with customer service via online chat, email and toll free telephone banking services.
  • Fund accounts: Customers can open different type of fund accounts online.
  • Transfers: If customers have two or more accounts with the online bank, they can transfer money easily between their accounts through online banking. This service can also be used for transferring funds to other bank accounts.
  • Balance, Recent Transactions and Statements: Customers can view and take print outs of statements, recent transactions and balance through online banking• Direct Deposits and Standing Orders: Online bank accounts provide these options to make customer’s life easier, and best thing is – this can be done online in fraction of minutes.
  • Debit Cards: Customers who have checking accounts will be provided with a debit card, so that they can withdraw funds at ATM’s.
  • Online Bill Payments: By logging on the accounts customers will be able to make payments between different states and countries; this can be done by filling the required information online.
  • Check: After customers open the accounts online, checks are mailed to them via post.
  • Loans: Through online bank’s, customers can apply for a loan by getting a quotation through their website.
  • Overdraft facility: Online banks are offering customers with overdraft facility; customers can use this overdraft facility by applying for it. Many people now opt for overdraft facility as this saves them during the rain day. Also interest to be paid on the overdrafts is usually low.

We can see that the features and services provided by online banking makes customers’ life easier, it also saves them from standing and waiting in long lines at the branch. Some people prefer online bank accounts as its less time consuming and simple to use.

Benefits of online bank accounts

Online bank accounts have many similar features and services that are similar to institutional bank accounts. With so much in common certainly customers would like to know why to opt for online banking, bearing this in mind we have listed some points below.

  • Hassle free banking without branch issues: As online banking doesn’t have branches customers don’t have to face the trouble of waiting at the branch. Generally customers have to stand in a line to submit forms for getting loans and opening accounts. However customers don’t face the same issue with online banks as it’s much easier. All that the customer has to do online is fill the details and click to submit. So we see that people can easily save time and get their banking needs fulfilled from any location with internet access.
  • Interest Rate: Online banks do not have high expenditure like the financial banking institutions. Buildings, staff, branches and other infrastructure expenditure is not applicable for online banks. As online banks don’t have high expenditure, they are more likely to give higher interest on savings and lower interest for loans. However this can vary from bank to bank and some financial banking institutions might offer more too.
  • Free Checking Accounts: Customers, who wish to get an online banking account, can simply start by applying online with a minimum balance of $1. Some online banks offer free checking accounts too. Customer doesn’t require huge deposits to open a checking account. It’s very rare to find free checking accounts at financial banking institutions.
  • Updated with technology: Financial banking institutions provide their customers with internet banking, due to which many customers get to manage some accounts online. However, when compared to online banks, we can see that online banks are more advanced with technology than street side banks. Online banks are totally dedicated to serving customers online, hence they always try to find new innovative methods to serve their customers. For example: Online banks came up with the concept of mobile check deposits, this service made customers download a mobile application through which check deposit can be made by clicking a picture of the check. The instructions to be followed would be provided by the bank and the mobile screen. Following which the customers of few online bank accounts could get their checks deposited without going physically anywhere. This way online bank comes up with many innovative tech savvy services to keep their customers happy.
  • Independent maintenance: Online bank account removes the hassle of middlemen. The customer doesn’t have to worry about any errors or wrong entries. As they will be the sole managing party on the account. When customers take care of their own accounts they are more cautious and careful while making payments and other transactions. As online bank accounts give customers complete access to their accounts online, there is more scope for managing the accounts productively. For example: Customer M has checking account and savings account. Ms M receives $1000 from her aunty; this amount credited her account as of today. In this scenario Ms M doesn’t have much expenditure for the next 1 year, and decides to save. She can immediately log on the account online and transfer the funds. By doing this she will earn interest from the day of receiving the funds, and she can also check how much interest she is earning by logging on to the account every month.
  • Saves Paper: Customers don’t have to order statements every month, as they can check the information online. This will surely reduce the requirement for paper and saves the environment in one way.

Hence from the above mentioned information we can clearly see that online banks can make customers life more comfortable, by helping them operate their accounts online. Online bank accounts are easy, safe and less time consuming. If customers are well advanced with technology and internet they can surely opt for online bank accounts, as it not only saves their time, but also helps them earn decent interest on savings.

Customers who opt for online bank accounts should be cautious about online banking security; it’s advisable to ignore phishing emails while following the other security methods to maintain the security of their account.

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