Debit cards are the new black (for people tired of being in the red). Low monthly fees, purchase guarantees and easy access to money (that is actually yours) are just a few of the reasons Australians are pocketing their credit cards and pulling out their bank card.
With interest rates increasing and the cost of living growing, Australians are running themselves ragged trying to pay off hefty credit card debts. According to the RBA, Australians made $133.8 million credit card transactions worth $20.36 bn in the month of September alone. This brings our credit card debt to a whopping $47.8 bn, up 5.9% since September last year. The average outstanding balance for an Australian is $3,262, an annual increase of 3.7% per credit card holder.
Some Australians have learnt to avoid being part of the staggering statistics. Whilst the numbers for credit card activity have risen, so too have EFTPOS. The total EFTPOS transactions including both purchases and cash out for September were 202.120 m and altogether worth a sum of $13.56 bn – a 16.4% increase in the last year.
It seems Australians are keen to beat the banks at their own game by using their own money and avoiding interest rate hikes. Now if only there was a way to utilize all the advantages of a credit card whilst using your own money.
Enter the debit card. It’s a piece of rectangular plastic that fits perfectly into the slots in your wallet and it gets swiped at the point of sale. You can pay bills with it on the phone and buy miscellanea off eBay. Cash out at the supermarket is still available and when you see an ATM, you can still visit it to withdraw money.
What is it?
A debit card does everything that a credit card does, except run you into debt. There’s no credit facility so it uses your actual money sitting in your account. You get all the flexibility of a credit card minus the bills and interest at the end of the month.
Who’s it for?
It’s ideal for those with limited funds or anyone with bad debt history because you don’t need a clean credit history to apply.
Who are the major players?
The big banks all have their own version of the debit card and they’ve teamed up with either Visa or MasterCard to make it happen.
Why should I get one?
Interest hikes will no longer interest you because you don’t pay interest.
You can organize a small loan that doesn’t charge interest with an overdraw limit.
Some cards have an internet guarantee in case you buy something you’re unhappy with.
A few banks offer charge backs so you can get a full refund if your ordered goods never arrive or are faulty.
You can choose to either sign or enter a PIN at the point of sale.
The monthly fees are very low and some waive them for students, pensioners and veterans.
No fees for ATM withdrawal.
You can set a daily withdrawal limit so you don’t overspend.
24 hour access via online banking which means you can transfer funds anytime.
They’re handy for vacations because they can be used overseas.
Chip technology on the card increases the security of the debit card.
Anything I need to be wary of?
Read the fine print because there may be hidden fees and charges.
You may need to press the CHQ or SAV button on the EFTPOS machine when you swipe at some stores – specifically Woolworths which doesn’t accept CR – and depending on your bank, you may see a fee being charged for using EFTPOS on your debit card.
When you pay via cheque or savings accounts instead of credit with your debit, you may lose your chargeback protection.
What’s the best debit card?
The ANZ Access Advantage card is supported by Visa and features unlimited transactions for flat $5 monthly fee which is discounted to 50% for students. There’s security on all purchases with ANZ Falcon and you get access to Visa Entertainment, allowing you to be the first to see new movies and score concert tickets with exclusive offers.
What else is out there?
St. George Visa Debit: No annual card fees, purchases itemised on statement, zero liability and charge backs available.
NAB Visa Debit: NAB Defence to fight fraud, higher security with chip technology on the card, verified by Visa with Visa Zero Liability, 90-day purchase protection insurance and a choice of black, red, white or pink for your card.
Commonwealth Debit MasterCard: $4-6 access per month waived for tertiary students, veterans and pensioners, increased security with chip technology and the option to pay by MasterCard PayPass – tap your card instead of entering a PIN or signing when you make a purchase of less than $100.