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Advantages and Disadvantages of Debit Cards

Find out what the advantages and disadvantages of debit cards are here with Savvy and compare a range of offers. 

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, updated on September 13th, 2023       

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Debit cards form the backbone of our financial security, as we use them every day to buy our coffees and lunches, shop for groceries and buy birthday presents online. Because they’re so important to our everyday lives, it’s crucial to understand the advantages and disadvantages of debit cards to get the maximum benefit from their use. Find out more about their pros and cons and compare debit cards right here with Savvy. 

What are the advantages and disadvantages of debit cards?

There are many things to consider when you’re looking for a new debit card. Fortunately, Savvy can help you find the right card by comparing offers from different issuers. Here are some of the advantages and disadvantages of debit cards you should consider during the comparison process:  

Advantages of debit cards 

  1. Easy to obtain – often provided for free as soon as you open a transaction account
  2. Widely accepted for payment – almost everywhere in the world 
  3. Convenient to use – often just with a tap or a swipe of the card 
  4. Earn rewards – in some cases, rewards are offered for your everyday spending and even for paying your utility bills 
  5. Only spend what you have – you can only spend what you have in your linked bank account to help you avoid balance deficits 
  6. No fees – unlike some credit cards, almost all debit cards are free to use and have no account-keeping fees 
  7. Available for kids and teens – kids as young as nine years old are able to get a debit card, while there are also special debit cards designed for teens
  8. Added security – if your card is lost or stolen, you can easily lock it to prevent thieves from accessing your money 
  9. Purchase protection – many debit cards come with additional purchase protection which can extend the warranty of the goods you buy

Disadvantages of debit cards 

  1. No credit available – as there’s no credit available on a debit card, you won’t be able to spread out the cost of larger purchases 
  2. Fees charged for overseas transactions – if you use your standard debit card overseas, you may be charged foreign transaction and ATM fees 
  3. Spending limits – some debit cards come with transaction limits as low as $1,000 per day, so you may not be able to pay for larger purchases over this limit 
  4. Overdrawn fees if you fall into the red – if you accidentally overdraw your debit card, you could be charged an overdrawn fee of between $30 and $50 
  5. Limited recourse if you don’t lock up – if you do lose your card and don’t lock it immediately, any loss of funds through fraudulent use can be hard to claim back 

How do debit cards compare with credit cards?

Debit cards have many advantages over credit cards. They’re easy to obtain and suitable for children and teens who aren’t able to access credit. For this reason, debit cards are also very suitable for those who have credit issues or a recent bankruptcy in their financial history. As such, debit cards are widely available to almost everyone to use. 

They are also generally a cheaper way to pay for goods and services, as most debit cards are no-fee and come with no interest charges. However, if a debit card is used overseas, or is overdrawn, there can still be overseas transaction fees or overdrawn fees as mentioned above. 

Credit cards can also be very useful, particularly if you want to make a large purchase such as a new lounge suite or dining room furniture when you don’t have all of the funds available in your account. They can help you spread the cost of larger purchases over several paydays. If used carefully, and paid off regularly, they can be a cheaper option than taking out a loan. 

However, credit cards also charge a very high rate of interest and it’s easy to forget to make a credit card monthly payment or fall behind with repayments and find yourself in debt with ever-increasing interest payments. This risk isn’t present with debit cards, so it’s very important to compare cards with Savvy to help you find the most affordable and suitable offer for you.  

More of your questions about the advantages and disadvantages of debit cards

What are the pros and cons of travel debit cards?

Travel debit cards are specifically designed to be used when travelling overseas. They allow you to exchange your Aussie dollars for another currency and store them on the card to be used when needed. Many such cards also allow free ATM withdrawals worldwide and offer reduced or no foreign transaction fees. However, some travel cards from non-bank lenders come with monthly fees, spending limits and transaction restrictions which can make them more expensive than standard debit cards. 

What are the advantages of using a virtual debit card?

A virtual debit card is stored in a digital wallet on your phone or wearable device, so you don’t have to carry around the actual plastic card. With a virtual debit card, there’s a lesser risk of dropping your card and losing it or having to dig it out of a deep handbag when you want to pay. They can be used by opening your digital wallet, selecting the card you want to use, and holding it near the EFTPOS terminal to authorise payment.  

What are the pros and cons of a prepaid debit card?

Prepaid debit cards are ideal for those who wish to cap their spending or use a card other than their standard debit card online. A cardholder can load their debit card with funds and use it to spend anywhere that Visa or Mastercard are accepted. They can also be used to pay for purchases online and reloaded if money is running low. However, they’re also more expensive than standard debit cards, as there are usually recharge and other account fees which apply too, so they may not be the best card for your situation. 

Are there benefits to giving my child a debit card?

Yes – a debit card is a great way to teach a young person responsible saving and spending habits, which could set them up for life. Since they can only spend what’s in their linked bank account, it isn’t possible to get into debt with a debit card and rack up large interest fees. In addition, for a very young child, it’s possible to have parental spending controls on the card so you can review what your child is spending their money on and block them from buying certain things, such as in-app purchases, as well as spending on alcohol and gambling. 

Can I customise my debit card?

There’s very little choice of customised debit cards from regular banks in Australia. Bendigo Bank offers the choice of a Geelong Cats or Adelaide Crows debit Mastercard, and ANZ allows you to choose between three colours, but other than that, you will usually have to take whatever card your bank gives you. However, there are many companies online that offer customised debit cards, so you can design your own card and they’ll transfer your card details over. A variety of stickers and covers are also available to transform the look of the front of your card. 

Compare debit cards today

Compare Australian debit cards with Savvy to help you pick out the best available deal for your needs.
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Disclaimer:

Savvy is not advising or recommending any particular product to you. We provide general information on products for the purposes of comparison, but your personal situation or goals are not considered here. Although we try to make our comparisons as thorough as possible, we do not have information on all products on the market on our site.

You should always consult a given offer's PDS or further documentation in the process of deciding on which loan to choose, as well as seeking independent, professional advice. If you decide to apply with one of the lenders listed above via our website, you will not be dealing with Savvy; any applications or enquiries will be conducted directly with the lender offering that product.

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Disclaimer and important things you should know

Quantum Savvy Pty Ltd (ABN 78 660 493 194) trades as Savvy and operates as an Authorised Credit Representative 541339 of Australian Credit Licence 414426 (AFAS Group Pty Ltd, ABN 12 134 138 686). We are one of Australia’s leading financial comparison sites and have been helping Australians make savvy decisions when it comes to their money for over a decade.

We’re partnered with lenders, insurers and other financial institutions who compensate us for business initiated through our website. We earn a commission each time a customer chooses or buys a product advertised on our site, which you can find out more about here, as well as in our credit guide for asset finance. It’s also crucial to read the terms and conditions, Product Disclosure Statement (PDS) or credit guide of our partners before signing up for your chosen product. However, the compensation we receive doesn’t impact the content written and published on our website, as our writing team exercises full editorial independence.

For more information about us and how we conduct our business, you can read our privacy policy and terms of use.

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