How to be a savvy spender
IN ECONOMIC terms, the past few years have been tough. However, if there’s been a bright side to the hard financial lessons learnt it is that the recession has shown us the importance of ensuring we’re all financially literate – and the need for consumers to pay attention to how they manage their money in the most effective way.
There has been a noticeable shift in attitudes from “life on credit” to “life in debit” in recent years. Although credit cards are still widely used as a means of payment, debit cards are becoming increasingly popular as a way for people to monitor their expenses and only spend what they have.
As a ‘buy now, pay now’ tool, where transactions are automatically deducted from your account, debit cards enable you to easily track your spending with an itemised monthly list of all your expenses.
In addition, more and more people are starting to fully take advantage of the benefits debit cards offer, rather than viewing them as just a cash withdrawal card.
This increase in popularity is due in large part to the fact that debit cards have become more widely available in the Arab world over the past few years, as more and more banks start to include debit facilities in their product offering.
There has also been increased education amongst consumers on the benefits of using debit cards as more than just an ATM card. Visa recently reported a 25.6 % increase in debit transactions in Gulf Cooperation Council countries, as opposed to only a 7.1% increase in credit card usage.
So, how do debit cards stack up against more traditional forms of payment, such as cash and credit? cashy takes a look:
Debit versus credit
While credit cards are essentially a loan from the bank, debit cards are linked to your current or savings account, ensuring you only spend what you have.
Transactions come directly out of your account, so you won’t incur any interest charges.
It is easier to monitor spending with debit cards, too, as you can access your debit account balance daily, and check expenditure.
A debit card is more secure than a credit card. When using a debit card a PIN number is used as a form of identification, whereas when using your credit card all you need to do is sign off the receipt, which makes credit cards easier to be used fraudulently.
Debit versus cash
Cash tends to burn a whole in your pocket: if it’s there, it’s pretty guaranteed that you’re going to spend it. Once cash is lost or stolen, there is no way to get it back, so in many ways debit cards are more convenient than carrying cash or cheques.
It is difficult to keep track of cash purchases, as you can’t track your spending unless you write down every single purchase you’ve made.
Pic credit: Michal Marcol/ FreeDigitalPhotos.net
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