Weigh the Pros & Cons Before Deciding

There are both advantages and disadvantages to being paid in the form of a debit card. In history, you were first paid by cash, then came check, later came direct deposit, and now many employers are offering weekly pay via a debit card.

This option is often used to replace direct deposit. Before making the decision, you should weigh all the pros and cons as they pertain to you on a personal level.

Debit and credit cards are used most often for conveniences, rather than for the extra line of credit. When you have your paycheck deposited onto a debt card, it would eliminate the need to taking a trip to the bank, or ATM machine, to withdraw cash.

Ultimately, you would usually have an extra method of payment when making purchases. Some individuals already have debit cards to their personal accounts, and may not want to add one more, and add confusion.

There could be fees associated with your payroll debit card. Such as a fee per use, monthly service fee, or fee per withdrawal. Alternately, you are eliminating a large amount of checking account usage, and may incur inactivity fees with your bank as well.

On the other side of fees, you may find that you experience less overdraft fees. Normally, a debit card that is used for payroll will act as a savings or credit account, not allowing you to make purchases that exceed your balance. Banks will often approve transactions that are within a certain limit over your balance, and then assess a large overdraft fee.

You earnings from your work would be available to you at all times. There would not be a need to wait for the bank to open, or to find a nearby check cashing facility in the event of an emergency. However, you may already have this luxury with a checking account debit card.

If you opt to receive your paycheck via a debit card, you would have to watch your spending a bit closer. Having a debit card, and no checks, may result in you spending more on things that are not in the budget. Basically, it may be a little too convenient at times.

In order to pay your monthly bills, you may have to withdraw cash from your payroll funding debit card and deposit it into a separate checking account. Many companies do take payments on the Internet, or over the phone, but many still require you to mail in a check for each payment that is due.

Furthermore, credit card companies will usually not allow you to pay your monthly payment via a debit card or another credit card. The reason for this is mostly that it appears as though you are using credit to pay credit, which could end up in a large debt problem later.

Companies offering payments via the Internet or over the phone may also charge a fee. The fee could be minimal, or it could be a larger amount, therefore you would again be breaking the budget and spending money that you did not have to.

Carrying a debit card is usually safer than carrying a large amount of cash. If your card is lost or stolen, you could have it deactivated immediately. Unfortunately, if cash is lost or stolen, there is usually no way to recover it.

Any debit or credit card has a potential for fraud. Debit cards would require a pin number for purchases, but do not require a signature. Using the debit card as credit, anyone could sign the name to it without knowing the pin number.

Fortunately, most debit and credit cards that carry a major brand logo will have some kind of fraud protection. Some banks also offer addition coverage. You may not be responsible for any fraud, or possibly just a small percentage of the loss.

Making the decision to switch to payroll debit can be excruciating. Be sure to weigh your personal needs before making the decision. You do not have to opt for this method, as there is not a law stating that if it is offered you must take it.

Posted by: Payroll Funding at 03:04 PM | No Comments | Add Comment
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