If you’re looking for a simple and convenient way to manage your money, you might want to consider getting a debit card. A debit card is a little plastic card that you can use to pay for goods and services, withdraw cash from ATMs, and make online purchases. But how does a debit card work and what are the advantages and disadvantages of using one?

What is a debit card and how is it different from a credit card?

A debit card looks similar to a credit card but it works differently in that it uses your own money from your bank account, rather than using a line of credit. This means that you can only spend what you have, and you don’t have to worry about interest rates, fees, or monthly bills. However, this also means that you have to keep track of your balance and avoid overdrafts, which can incur charges or penalties.

What are the benefits and drawbacks of using a debit card?

One of the main benefits of using a debit card is that it is widely accepted and easy to use. You can use it anywhere that accepts credit cards, and you don’t have to carry cash. You can also use it to shop online securely, as most debit cards have fraud protection features. Another benefit is that it can help you budget and save money, as you can see your transactions and balance on your online banking or mobile app.

The main difference and one of the bigger drawbacks is that it may not offer the same rewards or perks as some credit cards. You won’t find things like cash back, rewards points, or travel insurance. Debit cards probably help you build your credit score, as it does not show your credit history or repayment behaviour. Additionally, you may have to pay fees for using your debit card abroad or at some ATMs, especially if you have one of the non-Big4 bank cards..

RELATED: How you can actually earn rewards on your debit card

Who can get a debit card and how?

If you want to get a debit card, you need to have a bank account and be at least 18 years old (in most cases – although there are some debit cards for kids). You can open an account and apply for a debit card online, and you will receive it in the mail within a few days. You will also need to activate your card and set up a PIN before you can use it. In some cases, you might get a digital card to use on your mobile wallet beforehand.

A debit card can be a useful tool for managing your money and making payments. But, you should also be aware of the differences between a debit card and a credit card, and the pros and cons of each option. By knowing the ins-and-outs of each product, you can choose the best card for your needs and savings goals.

So now you know what a debit card is and how it could help you, let’s see how to use it. Here are some tips and tricks to make the most of your new debit card.

Things you’ll need to know about your debit card

Once you’ve received your new card in the mail, you’ll have to activate it before being able to tap away. This is a pretty simple process and will be detailed in your welcome letter. Most often you’ll just need to login to the providers app and follow the instructions.

TIP: When choosing a PIN make sure that’s it’s easy for you to remember, but hard for others to guess. Don’t write it down anywhere or you may void any fraud or zero liability protections you have.

One of the handy things about having a debit card is that you can track your spending in real time with your banks app. You should check your balance regularly to make sure you’ve got enough funds to make sure you don’t end up in overdraft. Checking the app also allows you to check for any suspicions activity on your account.

Now you’re all set up you’re ready to start using your card. You’ll be able to shop in-store, online and getting money out at the ATM.

How to avoid hidden fees

Using a debit card is generally safe and cost-effective, but there are some risks and fees that you should be aware of. Here’s some you should be looking out for:

Foreign transaction fees

These are fees that your bank charges you when you use your card abroad or in a foreign currency. When online shopping, you’ll make sure the merchant is processing their transactions in Australia. To avoid foreign transaction fees, you should look for a card that has no or low fees for international transactions or use a local currency when possible.

RELATED: Learn how to choose a debit card with no foreign transaction fees.

ATM Fees

These are fees that the ATM owner or your bank charges you when you use an ATM that is not part of their own network, like a Commonwealth Card at a Westpac ATM. Sometimes it can be hard to find an affiliated ATM, but you app should show the closet locations.

Overdraft fees

If you spend more than you have in your account, the bank may extend you an overdraft. You’ll get charged interest and fees, so make sure you keep an eye on your spending.

So is a debit card right for you?

You’ve learned what a debit card is and how it can help you manage your money better by only allowing you to spend only what you have in your account. If you’re ready to start, you can compare a range of different debit cards online. You can read our expert reviews to find out the features, fees, rewards, and reviews of various debit cards. Then you can also apply for a debit card online in a few easy steps.