Debit Cards, also known as Check Cards, is a special form ofcards that look to the merchant just like a Credit Card, with the VISA or MasterCard logo on them. However, this card is actually an ATM card that allows you to withdraw money from ATMs (directly from your checking account) without incurring interest. Also, the purchases made are debited (thus the name) from your account instantly. Therefore there is no monthly statement, no interest, nothing.
This card seems like a much better alternative to normal CreditCards, offering all its services without the risk of interest.
However, there are a few points to consider:
- The Debit Card does not offer any consumer protection nor extended warranty that the normal credit cards provide.
- There maybe a small monthly sevice charge involved when you use the card (e.g. 1.5$ per month for large banks in the USA, only in months that you use the card in). Note that almost all cards in the USA have no annual fee, unlike other parts of the world (e.g. Middle East).
Apart from the above, the debit card is a very convenient wayof avoiding the drawbacks of credit cards.
You can learn more on VISA Debit Cards as well as MasterCard Debit Cards
- We have a section on Credit Cards, explaining the difference between them.
- More on Debit Cards on Islamic Halal Finance site.