A debit card is an electronic card tied to a bank account. Debit cards cut down on processing costs and protect the buyer and the company accepting the card from problems with payment. Use debit cards instead of checks so that paying for things is easier with advice from a financial consultant in this free video on money management and personal finance.
Remember the old days when you would go to your neighborhood grocery store and write them a check, grocery store then had to take your check, deposit it into their account in order to get paid? Hi, this is Roger Groh with Groh Asset Management, and it seems so antique now because we all know that when you open a bank account, you're going to get a card -- an electronic card -- that you stick in your wallet or your purse and instead of giving the grocery store a check, you're actually going to take your card and you're going to swipe it. That card represents your check. It has the same effect. The difference is that it cuts down the labor cost tremendously in order for the grocery store to be paid. In addition, the grocery store knows immediately whether they're going to be paid. So the bank...the bounced check rate declined significantly. Now, from you, the consumer's point of view, why do it? Meaning, you still can write checks, why use a card? Well, it's easier, for one thing because you just swipe it and you're done. Number two, it's going to cut down on your costs a little bit because your bank now is charging you, probably, for each check that goes through their system because their labor cost is really higher. Number three, in most cases, if you make a purchase using a debit card and there's something wrong in that purchase, you may have -- and I stress may have -- the right to return whatever it is that you bought. You have to look very carefully at the wording in the prospectus of the card to determine if your card really does give you that option. It's a wonderful thing to have. Generally, it is free. Now, last, but not least, debit cards really... No, so those are the things you can do with debit cards. Make your life easier, they're cheaper, they're simpler, and they can protect you, the buyer. Hope that helps. I'm Roger Groh with Groh Asset, and thank you very much for spending time with me.