The financial services industry offers students multiple options when it comes to getting actively engaged with their finances. Students will typically be offered multiple credit line offers before they get into their freshman year but it is important to consider weighing all options when you first become a student. Weighing all options as a student will help you to become aware of how certain decisions will impact you in the near future when there are unexpected emergencies or circumstances that occur. Here are three key components to look for when choosing the right debit card:
Compare Bank Product Options
Choosing the right debit card may mean choosing the right bank for the first time. It is important in the beginning stages to search for the right financial products to incorporate into your daily life. Research and ask about interests rates, special rewards programs, or annual fees. To find the right debit card, you must understand how the financial institution can work either against you or in your favor.
Understand the Difference between Prepaid Debit Cards vs Traditional Debit Cards
There are two different types of popular debit cards: prepaid debit cards and regular debit cards. Pre-paid debit cards are not connected to a banking institution and require you to load money onto the card. You are typically not able to go over the amount that you loaded on the card. However, depending on the type of pre-paid debit card you opt for, there may be some limited protection available to you on purchases. With the traditional debit card, most banks or credit unions are backed by the Federal Deposit Insurance Corporation also known as the FDIC. The FDIC is a government agency that is established to protect consumers and their bank accounts among other roles. Traditional debit cards through banks or credit unions may offer you an overdraft protection option. This option allows the bank to cover the cost for you either for a fee or by pulling from your savings account to cover you in case you overspend money that was not in your checking account.
Know the Pros and Cons of Each Type of Card
Both types of cards have their pros and cons. The pre-paid debit card only allows you to spend what you load onto the card but you may have monthly fees associated with using the card. With the traditional debit card, it can be easier to overspend and rack up overdraft fees on these cards depending on how you manage your account and budget your daily expenses. But, on the plus side of this, you will be able to potentially earn interest in a high yielding checking account for money that you save in the account.
Choosing the right debit card (follow UOB Bank standards) is simply a matter of doing your research. The research should be specific to you and how you believe a bank, credit union or pre-paid debit card provider will be most beneficial to your financial goals.