Yes – just because a debit card is advertised as free doesn’t mean that you won’t be charged to use it in certain circumstances. Some of the potential costs include:
Surcharges
Some retailers, particularly restaurants and cafes, charge a surcharge for using a debit or credit card to pay using EFTPOS. A surcharge is an additional payment on top of your standard bill which covers the retailer’s costs of accepting card payments. For debit cards, this will generally sit at around 0.5% of your transaction or lower but can reach over 2% for certain cards.
Under the Competition and Consumer Amendment Act 2016, retailers are only permitted to impose a surcharge to cover the actual cost they incur from their bank. This bill was introduced to prevent excessive surcharges which were common in the airline industry at the time.
The Act covers all payments by EFTPOS using Mastercard and Visa debit and credit cards. However, it doesn’t cover payments by BPAY, PayPal, Diners Club cards, American Express cards or cheque payments.
Overseas currency conversion fees
If you use your debit card overseas, you may incur both overseas transaction charges and currency conversion fees. These international fees are charged if you pay for something in another currency and can range from 1% to 3% of the value of the transaction, which can make using your debit card overseas quite expensive.
In addition, if you use an international ATM which isn’t affiliated with your bank, you can also incur substantial withdrawal fees if you aren’t careful. Make sure you’re familiar with the overseas costs of using your debit card if you plan to travel.
Overdraft fees
In most cases, if you try to make a transaction that would put your bank account balance into the negative, it would instantly be declined. However, due to delays in processing payments, a transaction can sometimes be approved which results in an account becoming overdrawn. If this happens, an overdraft fee can be charged, which can be as high as $30 to $50.
