Many consumers have heard of the standard debit card account which works almost much like a regular credit card. Many people have never heard of a deferred debit card, however, which works by debiting all of the user’s charges once per month, instead of per transaction. It works much like a charge card but with your own money.

Unlike a credit card, a deferred debit card does not charge interest or fees on your purchases, as long as you pay the full balance by the due date. It’s linked to your bank account and has a spending limit based on your available balance, or a pre-set amount.

What is the Afterpay Plus Card?

The main type of deferred debit card in Australia is the Afterpay Plus Card. The Afterpay Plus card is a new way to shop online and in-store with Afterpay. It is a virtual Mastercard that you can use at any retailer that accepts Mastercard and Afterpay. You can split your purchases into four equal instalments, with no interest or fees if you pay on time. To get the card, you need to have an Afterpay account and download the app. You can then activate the card and set a spending limit. The card will show a barcode or a card number that you can use to pay for your items. The card is only valid for one purchase at a time, and you need to repay your instalments before you can use it again. The Afterpay Plus card is a convenient and flexible way to enjoy the benefits of Afterpay at more places.

What are the benefits of using a deferred debit card?

Having a deferred debit card can help you manage your cash flow and budget better. It allows you to spread the cost of your purchases over time without paying extra charges. It could be handy if your income is paid on a monthly basis.

Like the Afterpay Plus Card it can also give you access to discounts and rewards from participating retailers and partners, such as cashback, vouchers, or free shipping. They’re also accepted wherever Visa and Mastercard are, making them convenient when you’re travelling.

What are the risks of using a deferred debit card?

Below are some reasons why a deferred debit card might not be as good an idea as a standard debit card.

Less security.
With a standard debit card account, many of the transactions initiated require that a personal identification number, or PIN, be entered in order to complete the payment. Thieves must learn this PIN in order to be able to use it for either a cash withdrawal or to use it for a purchase. With deferred debit cards, however, all that the user needs to do is fake the signature on a receipt. Because the merchants do not know what the true debit card holder’s signature looks like, they will not be alerted to the fact that a fake signature has just been given and therefore will finalise the purchase. In this way, deferred debit cards are much less secure than a standard debit card if they are lost or stolen.

Greater overdraft risk.
Because of the collective hold that is instigated when making a purchase with a deferred debit card account, a user can quickly lose track of how much funds they have remaining and end up exceeding their balance simply out of confusion. If this happens, the debit card user will be assessed an overdraft fee which they must pay in addition to the amount that they exceeded. For example, if a deferred debit card user who has $1,000 left on their debit card account makes several purchases, including major bills and utilities, but misjudges the amount of their total purchases, leaving their account $10 overdrawn at the end of the month, their bank will exact a $35 overdraft fee, resulting in the debit card user losing $45 that they must pay to the bank to bring their account into a positive balance. For this reason, it is always advisable for consumers who are thinking about opening a deferred debit card account to first check with their banks to see what will be charged for overdrafts and what, if any, extra fees they should keep an eye out for.

Fees and charges.
If you miss a payment or pay less than the full balance by the due date, you may incur late fees or penalties, which can add up quickly and affect your credit score. You may end up with more debt than you can afford to repay, which can lead to financial stress and hardship.

How to choose and use a deferred debit card wisely?

Before you decide to get a deferred debit card, there’s a few things you should keep in mind.

Eligibility criteria.
There may be a minimum income or a credit score requirement you need to meet before you can become eligible. This is to make sure the product is a right fit for you before you apply. Read any fact sheet and TMD before you open an account. Double check any monthly spending limits too.

Fees and charges.
Make yourself aware of any fees or charges that may apply to your card, such as annual fees, late payment fees, overdraft fees, foreign transaction fees, or cash advance fees.

Customer service and support.
Make sure you read online reviews of the deferred debit card provider to see how easy it is to contact the customer support team.

Tips for using your deferred debit card

Some final tips that you should consider.

• – Only buy what you need and can afford to repay
• – Keep track of your spending and balance
• – Pay on time and in full
• – Review your statements and transactions regularly
• – Report any issues or problems as soon as possible

A deferred debit card can be a convenient and flexible way to pay for your purchases, but it also requires careful management and discipline. By following these tips, you can choose and use a deferred debit card wisely and avoid getting into financial trouble.