How Debit Cards Can Benefit Your Financial Well-Being
When it comes to building up your finances, the simple truth is that you have to spend money as you learn how to manage it. Rent, utilities, gas, food, and insurance, it’s all coming your way every month, and this can seem like a lot to handle on top of learning how to actually achieve financial stability.
One question that is part of almost everyone’s financial journey in today’s modern society, is the option of either having a credit or a debit card. Both of these cards can look almost identical, and they can also accomplish the same general goals. While both debit cards and credit cards have their own unique benefits, a debit card can be used in powerful ways to help build up your financial well-being.
If you have been wanting to find out more about how a free debit card can help you build up your financial well-being, here is everything you need to know!
What Is a Free Debit Card?
A debit card is a tool that is typically free to acquire and is linked to a checking or savings account. What a debit card does, is it gives the holder of a bank account instant access to the resources that are in that account. This can be extremely advantageous, as the only other alternative for using that money would be to physically withdraw it, or utilize paper checks.
With a debit card, people can utilize the resources that the card is linked to online, at merchants, or through any digital means. Typically a debit card is free and simply requires opening some kind of checking or savings account.
How is a Debit Card Different From a Credit Card?
In order to understand how a free debit card can be used to help a person understand financial responsibility and build their financial well-being, you need to compare them to credit cards. Some people may not know the difference between a credit and debit card, since both can look identical, and in many ways can be used in identical ways.
A credit card can be used just like a debit card can, however, this card is linked to a line of credit that is approved and lent to a user by a financial institution. That means that the resources the credit card is linked to – the credit line itself – do not actually belong to the person using the credit card. Instead, they represent a loan that must be paid back in full and on-time. If a person were to pay back a credit line late, extremely high-interest rates will be applied to their payments.
While there are some benefits to having a line of credit, such as having access to resources in a pinch, there is also a potential for the risk of debt. If for some reason a person were to fall behind in their payment on a line of credit, credit companies begin to issue incredibly high-interest rates on future payments. This is typically how people fall into debt while using a credit card because they still have access to existing credit while paying interest on past credit they haven’t paid off yet.
A free debit card offers another solution, in that it makes resources available to a person, without giving them a line of credit that represents the potential for debt. For example, when a person uses a debit card, they are constantly in touch with the actual cash on hand that they own. This can help people who struggle with spending, to better understand what they actually can and cannot afford.
Incenivitzed Saving and Spending
The major drawback to most free debit cards is that while they can help a person avoid the debt of a credit card, they don’t often represent any kind of incentivization. Most credit card companies offer some kind of spending incentive to get people to actively use their lines of credit. These incentives can be anything from free cash back on certain purchases or acquiring points that can be used at hotels or specific airlines.
Yotta is changing this, however, by implementing one of the first incentivized debit cards. By using Yotta’s free debit card, this company is rewarding wise saving, as well as wise spending, through an in-house lottery system. The more money a person saves in their Yotta savings or checking account, the greater chance of winning a weekly lottery prize of up to 10 million dollars! Not only that, but Yotta even increase the chances of winning big by how many purchases are made with the free debit card they issue.
Conclusion
A debit card is a wonderful tool for people who are learning how to be financially responsible and control their spending. Because it doesn’t give the option for lines of credit that can quickly turn into debt, a debit card can be a great tool for helping people learn concepts of healthy budgeting, spending, and saving.