Most banks offer the debit cards free to their customers, but also there are some charges on your debit card which can be lowered. Debit cards unlike credit cards draw money from the designated account immediately upon transaction. Whilst the card use may be free there can be hidden fees. Fees for example; going over the number of transactions allowed, use at an ATM, drawing money whilst travelling abroad. As long as funds are available you can use it with no charge on your account. The danger comes if you overdraw on your account which then attracts your banks set fees for such action.
If you overdraw on an account that has no facility for overdrawing you will be charged a NSF – non sufficient funds fee and you run the risk of having your account closed.
If you have a courtesy pay service; this is an arrangement with you bank to cover when you account drops below zero up to an agreed sum This must be paid back or your account may be closed. There will be a fee every time you use this service.
Having an overdraft transfer allows money to be transferred from a savings or other account to cover a zero balance in your checking account. There is normally a periodic fee for this plus a limit to the number of times it is used.
Overdraft/line of credit is an arrangement with the bank for a set amount to be used if your balance drops to zero. The overdraft has a limit on how often this can be used and a charge for arranging it and interest on any monies used from the line of credit.
As you can see your debit card might not come with charges but irresponsible use certainly brings charges. Responsible money management is the key on how to lower the charges on your debit card.
- Check your balance frequently.
- Stay within your limits.
- Do not have an arranged overdraft just for the sake of having one.
- Ensure you know if your bank has a limited number of transactions fee on your debit card – if so keep within the limit by planning your spending.
One debit card that does accrue a large number of fees is the prepaid credit cards. Whilst a useful alternative to carrying large sums of cash and for travelling, the fees for a transaction and use at an ATM can vary considerably from company to company. When looking how to lower the charges on your debit card, you can consider a pre-paid debit card. Explore all the options carefully, ask for the fee structure and identify the one that will work for you.
Ultimately the only way to manage your debit card fees is:
- To be aware of what the fees are, ask your bank to clarify what is chargeable.
- Do not just accept a card because it is offered.
- Use the debit card responsibly; it is your cash you are spending.
- Check your account regularly.
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