I recently read that debit cards are the fastest growing payment method. Why? I've never understood the allure of these "plastic checks." They look like a credit card, but, as the name implies, debit cards deduct the cost of a purchased directly from your checking account at the moment of sale. The cards benefit merchants (instant payments) and banks (processing fees), but I fail to see how they benefit consumers. Let's look at the pros and cons of these cards:Pros
- More convenient than checks.
- No bill to pay (or forget to pay) at the end of the month because charges are deducted from your checking account at the time of purchase.
- Fewer consumer protections than a credit card (see this Bankrate article.)
- No rewards - miles, cash back - for purchases.
- No float - buy-now-pay-now compared to credit cards buy-now-pay-later approach.
- Greater consequences of fraud - it depletes your checking account directly, may take time to correct, and it isn't covered by the Fair Credit Billing Act.
Why would anyone use a debit card over a credit card? That's a question I cannot answer.