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The Basics of Banking: Part 4

December 9, 2020

The Basics of Banking: Part 4

Debit cards and ATMs are great. Just slip your card in a machine, press a few buttons and now you have cash, right?

Of course, we all know it’s a little more complicated than that. ATMs, debit cards and credit cards are convenient, but they also require careful oversight. Otherwise, you could find yourself spending more than you planned. That leads to growing debt and financial stress, which is definitely not convenient.

Debit and credit cards often look identical. They have the company logo like “Visa” or “Mastercard” stamped on the front, a computer chip, a magnetic strip on the back and other similar features. It’s important to make sure you understand the difference between a debit and credit card and that you have a plan for how to best use them.

A debit card allows you to spend money you’ve already deposited in your checking account, so it’s typically used for everyday purchases. Card reader machines at the register connect directly to your account when you swipe your debit card, so each purchase you make is subtracted from your account immediately. Some transactions such as pay-at-the-pump gas purchases or payments at restaurants will show a pending amount that is different from the amount that will actually be subtracted from your account once the transaction is final. That’s why it’s a good idea to use a mobile banking app and enable debit alerts, so you can easily track your spending in real-time.

When you use a credit card, you are essentially borrowing money to buy something. That means you could pay interest on top of the purchase price if you do not pay your monthly statement balance in full. Some people find it helpful to use credit cards in cases of emergencies or for unplanned expenses. Having a credit card can impact your credit score, though, so make sure you clearly understand the terms and conditions of any credit card before applying for one.

You may not know this, but ATM stands for “automated teller machine.” They’re great for basic transactions like withdrawing money, making a transfer, and some machines can even accept deposits. Banks often place limits on how much you can withdraw from your account at one time or in a single day. Be aware of these limits so you can plan ahead when you need cash.

If you use an ATM that’s not owned by your particular bank, you might have to pay a service fee. If you choose to accept the service fee and complete your transaction, make sure to keep track of the additional charge in your records.

While you can withdraw money on a credit card using an ATM, remember this is like taking out a loan. You’ll pay interest on what you withdraw, and you might also get charged a service fee.

So, is it worth using ATMs, debit cards and credit cards? They’re incredibly convenient, can be used almost anywhere, and are safer than carrying cash.

Debit cards are available at no charge with Origin Bank’s student checking accounts. There’s no monthly service charge, full mobile app capabilities, and parents can easily transfer funds from their regular Origin account into a student account. Origin also provides many convenient ATM locations throughout Texas, Louisiana and Mississippi.

Origin Bank believes it’s never too early to build good money management skills. With a solid foundation, kids and young adults develop the knowledge and financial habits that help them become independent adults and avoid common mistakes that can lead to long-term struggles.

Next, we’ll talk about security and what to do if your wallet or purse is stolen. Contact us today and we’ll help you find the right checking account for you.


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