4 Reasons a Debit Card Is the Key To Saving Money

While debit cards don’t come with as many benefits as credit cards, there are several ways that using a debit card can help consumers save money . Debit cards are very beneficial, especially for younger people, those who want to set a budget for themselves or anyone who desires a more secure purchase .

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While both credit and debit cards allow you to make instant purchases, transactions made with your debit card take money directly from your checking account. However, unlike debit cards, credit cards allow you to build credit and earn rewards such as travel points or discounts. While credit cards come with many benefits of their own , they also have drawbacks and for some debit cards are the ultimate key to saving money.

Here are a few ways debit cards can help consumers be more financially savvy spenders.

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Limits Your Spending

Because debit cards pull money directly from your checking account, you won’t be able to spend more money than you have. That’s why debit cards are a great way to budget and limit yourself on what you purchase; unlike a credit card, you won’t accumulate debt.

“One of the coolest things about debit cards is how they keep you on budget,” said Ned Priestly, CEO of My Quick Loan . “Since you’re using your own money, you’re less likely to splurge on stuff you don’t need. It’s like having a built-in spending limit that helps you stay in control of your finances.”

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Tracks Your Spending

With a debit card, consumers are able to see exactly how much money they’re spending as well as when and where they spend it, causing them to pay more attention to how much money they’re using.

“Having a debit card makes you more aware of your spending habits,” Priestly said. “You’re using real money, so every purchase feels more meaningful. It’s like a little reality check every time you swipe, which can help you make smarter spending decisions in the long run.”

Additionally, every debit card purchase will immediately show up in your bank account, allowing consumers to monitor their spending accurately.

Fewer Fees

Unlike a credit card, debit cards won’t accumulate debt over time. Since debit cards only use money you already have, this prevents you from running up debt or paying high interest fees. Plus, many credit cards charge annual fees that you don’t have to worry about when you use a debit card.

“Debit cards usually come with fewer fees than credit cards,” Priestly said. “Some banks might charge small fees for things like overdrafts, but they’re usually way less than the interest rates and fees you’d get with a credit card. That means more money in your pocket to put towards your savings goals.”

More Security

Another way that debit cards allow you to save money is that they offer more security with your purchases compared to cash. While they don’t offer the same level of fraud protection that credit cards do, they are still generally safer to carry on you than cash.

“Regularly reviewing your bank statements, as I advise with credit card monitoring and setting up alerts can catch and address fraudulent activities swiftly, minimizing potential losses,” said Russell Rosario, co-founder and CFO of Profit Leap . “This layered approach to financial security not only safeguards funds but also fosters disciplined financial habits, aiding in long-term savings.”

Saving Money With Debit Cards

Ultimately, while debit cards don’t offer the same rewards or credit-building perks that credit cards do, debit cards are a great way for consumers to save money. They allow people to track their spending, stick to a budget and avoid the risk of fees or additional debt, thus making them a key tool for managing finances and saving money.

This article originally appeared on GOBankingRates.com : 4 Reasons a Debit Card Is the Key To Saving Money