Debit cards, anyone?
Yesterday’s The Star online had an article on the increase in debit card usage in the current economic conditions as a measure to keep one’s debts in check.
The method of swiping the card is very similar to credit/ charge cards, with one exception, there isn’t any interest charged on late payments. This is because, one has to have sufficient money in one’s account before the transaction can take place. So, if you are trying to swipe RM500, but only have RM400 in your account, this trasaction will not go through. So, in a way, it is helping us to spend within our means.
When I first heard of this debit card, I was told that the main selling point was that it is helping us to spend within our means as well as to minimise the need to carry around cash. While I agree to some extent that it DOES help us to spend within our means, we have to be mindful that it is actually helping us to spend within our balance in the account. So, if that particular account holds most of your cash, you are still heading for trouble if you spend all the cash stored in there.
Minimising the need to carry around cash does somewhat appeal to me, but then my question is, how wide is the network for debit cards? In some western countries/ developed nations, debit cards are an alternative to cash and so, any mom and pop store will also have the ability to swipe the card – do we have them here? I think not. Imagine going to the grocery shop near your house and trying to swipe a debit card – you probably get scolded for that!! Or, if you want to buy a newspaper/ magazine – do you think your neighbourhood newstand will have a machine set up for a debit card? How about the kiosks in the malls? or the flea markets? Until we have a more extensive network, or cheaper merchant fees, this debit card will have its own limitations.
I am no sure if the increase in the numbers reported is as a result of promotions that the banks were having to drive conversion/ take-up of a debit card. If it is, then there is still much to do in order to have its usage ramped up to the levels seens in developed nations.
Do you have a debit card? What is your experience in using them?
