Living Life on a Debit Card

If you don’t qualify for a credit card for whatever reason—no history, troubled employment situation, self-employed without significant financial backing, poor credit score, etc.—there is still hope for retaining the convenience of plastic without all the added negatives that come with using credit cards. The answer? Debit cards, of course.

Debit cards are really quite simple in that they act just like checks or cash, but they look just like credit cards. Not only do you have no bothersome monthly interest payments to make on top of the original prices for everything you purchased with the card, but you also don’t have to deal with monthly or annual usage fees (banks in the US are still in the middle of debating whether or not to tack on small monthly fees, as we recently saw from the major banks Chase, Bank of America, and Wells Fargo, but these banks have since retracted their proposed fees due to consumer outrage). Whereas a credit card could charge you over $80 per year or more (before interest payments), debit cards are free with select checking accounts.

So, we understand that debit cards are great, but is it possible to pay for everything with just cash, checks and a debit card? As stated in a previous article I did on living without a credit card, this is indeed possible and highly beneficial to those who choose to switch over to this lifestyle.

The most obvious benefit of giving up credit in favor of debit cards is that your tendency to overspend or impulsively purchase something you don’t absolutely need vanishes almost immediately. If the funds aren’t there in your bank account, then you can’t have it (simple as that). Whereas with credit cards, the overused excuses of “I’ll pay it off sooner this time” or “I’ll cut back on _____ this month so I can afford this” never work out, as much as you promise yourself that they will. The spending habits of those who overindulge with their credit cards has been the subject of fascination for psychologists for years, and the conclusions have been almost universally the same: avoid credit altogether if you know (or even have a suspicion) that you won’t be able to handle your finances with the upmost austerity.

Unfortunately, in a consumer-centric society, keeping our cards in our wallets in the face of temptation is impossible for many people, making debit cards a viable and highly favorable alternative, because with these, you know what your limit is. You’re essentially forced to spend within your means, lest you incur costly overdraft fees or just run out of money before the next paycheck comes in.

So, why else is debit the way to go besides your own lessened desires to overspend and lower/non-existent fees? Although debit cards don’t help or hurt your credit score, they can be great “rehabilitation” devices for those recovering from a massive implosion of personal debt loads. You won’t be tempted to spend “just a little” outside of the parameters of your budget in a given month, as you’ll be limited to only what’s available in the bank, boosting your overall sense of responsibility and financial security.

Living Life on a Debit Card is a guest post by Kelly at Master Your Card.