A debit card can be used for almost any type of transaction for which a credit card can be used. Debit card can be used for making online payments, for purchases at retail outlets, for cash withdrawal from ATM machines and so on.

It is quite possible that some merchants may not accept payments made through credit cards, but they may accept payments made with a debit card. Even though a debit card may offer numerous advantages to the card holder, it is not free from limitations.

Four Disadvantages of a Debit Card

No Limit

Unlike a credit card, where a limit is approved for the card holder, there is no pre approved limit in case of a debit card. A debit card can be used for making payments till the time a card holder has sufficient balance in his/her bank account. This may make a card holder to spend extravagantly on his/her purchases. Further, in case debit card is stolen, perpetrator can use it for fraudulent transactions up to the amount available in the card holder’s account.

Dispute Issues

In case of any faulty material supplied by a vendor, a credit card holder can raise a dispute before releasing the payment for a credit card bill. A debit card cannot raise any such issue with his/her bank as the payment has already been debited from his/her account in favor of the vendor. In many cases this can result in a potential loss arising from non acceptance of faulty product and refund of money (for such product) by vendor to the card holder.

Continuous Tracking

A debit card holder is required to maintain a proper track of all transactions and payments made with the debit card. A debit card holder has to ensure that sufficient balance is available in his/her bank account before using debit card. Generally, bank statement is used as a basis for identifying transactions made with the debit card, but such statements are available at the end of the month.

Since money has already been debited from the card holder’s bank account, such a delay can cause a loss to the debit card holder in case any overdraft fees or other financial charge has been levied by the bank on account of non availability of sufficient funds in the bank account of the card holder. Even in cases where account balance can be confirmed by using internet banking facility, a card holder will have to keep a constant check on the amount of funds available in the bank account.

Lack of Credit Facility and Interest Income

A debit card does not provide any kind of credit facility to the card holder. Whatever be the amount of transaction, payment is immediately debited from the bank account of the card holder. As a result, a debit card holder looses the opportunity of earning interest income on his/her bank account balance. This is one of most important disadvantages of a debit card as a debit card holder cannot use debit card like a loan and make payment before interest on such loan becomes due.

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