Your parents trust you at home by yourself. You’re allowed to go to the movies with your friends, without an adult. You’ve even got a steady income from babysitting or doing yard work.
Now that you are earning your own money, you might be interested in a debit card. Paying with plastic gives you freedom and allows you to leave your change at home.
Of course, getting your parents to agree will require showing them that you're ready for the responsibility.
The best way to show your parents that you’re ready is to learn how debit cards work.
Why use plastic at all?
You might want a debit card just so that you can seem cool and mature, but there are many other good reasons for getting one. They’re really convenient. Debit cards:
- Are accepted almost everywhere
- Are fast
- Allow you to carry less cash
- Work as a cash card at an ATM (automated teller machine)
- Draw cash out of your checking account
Debit card: your own money
Debit cards use your money— but you still have to be smart about it.
A debit card gives you access to your own money. It works like a check because it uses money from your checking/share draft account.
Having a debit card isn’t like having unlimited money. You need money in your checking account in order to pay for something with a debit card.
For example, say you want to use your debit card to buy an iPad for $499. You must have at least $499 in your checking account to cover the purchase. When you swipe your card, the $499 automatically leaves your account.
Sometimes, the money doesn’t leave right away. If this happens, the card places a "hold" on the $499 right away, reserving your money for that transaction.
Don’t spend too much
Sometimes people lose track of the money they have in their account and they try to spend more than they have. When this happens, two things can occur:
- Your card can be declined
- The transaction goes through, and you get charged overdraft fees.
Having a card declined is embarrassing enough, but the real problem is when you are charged for an overdraft. Overdraft fees can stack up really fast, and you might not even realize it until it’s too late. That’s why it’s important to know how much is in your account at all times. It’s smart to always leave a cash cushion in the account so this doesn’t happen to you.
Luckily, many credit unions have online and mobile banking to help you keep track of your balances.
Debit cards aren't the only kind of plastic...