When you open a checking account, it’s common – and important – to review all of its fees and features. But one feature of that account that’s often overlooked is what you use to spend from it: a debit card.
Debit cards offer a variety of high-tech functions, from contactless payment capabilities to advanced security features. But you may not realize that your debit card has benefits that can help you save.
Here are six lesser-known debit card benefits that can help contribute to your financial well-being.
Debit cards have a variety of benefits that can help you save money and protect your finances, like round-ups, temporary card freezing, and earning cashback.
Online banks offer more debit card benefits and lower fees than traditional banks.
Be sure to check any minimum balance requirements or monthly deposit terms to access debit card features.
1. Debit Card Round-up
The Debit Card Round-up is a smart way to easily save extra money when making everyday purchases. With this feature, each transaction is rounded to the nearest dollar, and the additional amount is automatically transferred to the linked savings account. It is offered by many traditional and online banks, including Bank of America and Ally Bank.
For example, if you spend $4.75 on coffee, your purchase will be rounded up to $5, and the additional 25 cents will be credited. Although a quarter may not seem like much, it adds up over time. If you spend the same amount on coffee every day for a year, and make the change, you’ll save over $90.
2. Temporary card freezing
Imagine you’re enjoying a weekend getaway when you discover that your wallet, along with your debit card, are nowhere to be found. Panic begins to set in when you consider the potential financial consequences of a lost card. This is where temporary card freezing can be a boon.
Temporary card freezing allows you to immediately “freeze” your card, meaning any purchases made using it while it is frozen will be declined. To implement a freeze, you’ll need a mobile banking app, then follow these simple steps:
- Open the Mobile Banking app on your smartphone.
- Visit the section of the app where you can manage your debit cards.
- Look for the option to freeze or lock your card – it will probably be labeled “Card Freeze” or “Card Lock.”
- Follow the on-screen prompts to confirm the temporary freeze.
Once you find your wallet or resolve the issue that caused the freeze, you can unfreeze the card immediately in the same manner as you initiated the freeze.
This feature not only adds a layer of security in case of loss or theft but also prevents unauthorized transactions. By freezing your card immediately, you can reduce the risk of financial loss and put your mind at ease.
Contactless payments have emerged as a game-changer, with 83 percent of respondents saying they had made a contactless payment in the past year, according to the 2021 Radiant survey.
Although you may be familiar with tap-to-pay – a form of contactless payment – you may not know that it actually comes with special security features to protect your finances.
On the one hand, tap-to-pay eliminates the need for physical contact with communal card readers, reducing the risk of card skimming. But it also comes with a distinct technical advantage: Every transaction made with Tap-to-Pay has a unique key that protects important card information from being stolen. This unique key comes from something called encryption – a process that codes the data from each transaction and ensures that the data cannot be used for other transactions, because it is unique to that specific purchase.
Beyond security measures, tap-to-pay offers a health benefit. More than a third (35.5 percent) of those surveyed by Radiant said they prefer tap-to-pay for health reasons, which allows them to avoid touching communal readers or cash.
4. Virtual Card Number
Online scammers are rampant, and it is of utmost importance to protect your information when shopping online. One way your debit card can help you do this is by providing a virtual debit card number. When shopping online, instead of using your actual debit card number, a virtual (temporary) card number is generated for each transaction.
A one-time number acts as a decoy, keeping your real card details hidden from potential hackers and scammers. Even if the virtual card number is compromised, it becomes useless for any subsequent transactions.
You may be able to generate a virtual card number through your bank’s app, website, or even a browser extension. For example, at Capital One, virtual card numbers can be obtained through the Eno browser extension. When you checkout at an online merchant, you can log into your bank account through the extension, and Eno – Capital One’s virtual assistant – will create a virtual card number for you.
5. Cashback Offer
Despite traditionally being associated with credit cards, cashback offers have made their way into debit cards as well. Some debit cards offer unique cashback opportunities on your purchases, turning routine spending into a source of financial gain.
Cashback debit cards are not only a way to earn some extra cash, but they can also reduce your reliance on credit card debt. Think of it this way: By earning solid rewards on debit purchases, you may find that the temptation to resort to credit card spending is reduced, which comes with the risk of accumulating high-interest debt.
You will find cashback debit cards at most online banks. For example, at Discover Bank, you can earn 1 percent cashback on up to $3,000 per month.
Aspiration is a fintech company with a unique cashback offer: Along with its free spending and savings account, the Aspiration Debit Card earns up to 5 percent cashback on purchases made at select environmentally conscious businesses, letting you save while also helping the environment. Help is also available.
6. Overdraft Buffers
If you’ve ever been in the check-out line and realized that your bank balance is a little lower than expected, you can appreciate how an overdraft buffer can make a significant difference. Having an overdraft buffer – which allows you to overdraw your account by a small amount without being charged – means there’s less to worry about potential overdraft fees, plus you avoid the embarrassment of a declined card. Are.
By protecting you from overdraft fees, these buffers can help contribute to long-term savings. They can be useful in situations such as a grocery bill being a few dollars higher than your account balance or getting an auto-debit for a utility bill during a tight financial week.
The buffer amount varies depending on the bank. For example, Citizens Bank has a small overdraft buffer of $5. Other banks are more generous: For example, Truist allows Truist One checking account holders to overdraft by $100 without penalty.
How to find the best debit card
Looking at the benefits of a debit card can be part of a broader research on bank account options. Although a debit card isn’t the only factor to consider, finding a card with benefits like better security measures and additional ways to save can be an advantage, as long as you’re not paying extra fees.
Chris Deodato, CFP, founder of Wealth Financial Planning in Palm Beach Gardens, Florida, recommends searching with online banks. “Overall, online banks (like Ally, Chime, Discover, Axos) are going to offer the best debit card features, while traditional brick-and-mortar banks are usually going to offer the least additional debit card benefits and higher fees. ,” He says.
Be sure to check if there are any minimum balance requirements or monthly deposit requirements for opening an account and accessing debit card features.
Your debit card can be more than just a tool to access money. It can also be a valuable asset to your financial security.
With debit cards that come with unique savings opportunities, not only can you save more, but you may also find that you are less likely to turn to credit cards to receive these benefits, thereby increasing debt. The need will be limited.