What is a Debit Card?
A debit card is an instant withdrawal from your bank account. When you use a debit card, the store is immediately taking money from you. If there is no money on deposit in your bank account, the debit may bounce back to the store as “declined.” The store will ask you to use another card or decline the sale. If you have overdraft privileges, you may put your account in overdraft but now you are also subject to fees and interest charges. Most people keep track of their cheques (which take a few days to clear your bank account) and pre-authorized payments each month. Gone are the days if you ran out of cash you simply stopped spending. Today, using a debit card, your bank account has to run out of money (including the overdraft limit) before you stop spending. When your bank account runs dry, the automatic pre-authorized debits and any cheques you have written will also bounce.
You should log all of your debit purchases in your cheque record book or computer to track your spending. If your bank account is low – slow down spending. If you cannot keep track of your bank account, consider going back to cash for everyday small expenses. You might be surprised at how much breakfast, coffee, donuts, etc. actually cost each week. Consider using your new knowledge to start a budget for yourself so that you know where your money is spent. Please refer to our blog on “Budgets” if you are interested.
Contact Rumanek & Company Ltd. for more information on bankruptcy and debt solutions. Or please fill out the free bankruptcy evaluation form. To learn more please visit our YouTube Channel. Rumanek & Company have been helping individuals and families overcome debt for more than 25 years.