Find the best debit card for your needs with this essential guide.
A debit card offers the convenience of making purchases online, in-store and overseas, without the added pressure of interest charges that come with a credit card. Debit cards also give you easy access to the funds in your account.
The best debit cards allow you to spend your money whenever and wherever you want, but the right debit card for you will depend on how you want to use it.
Let’s take a look at how to find the debit card that best fits your spending needs.
What is a debit card?
Debit cards allow you to use the money in your bank account to pay for purchases. Unlike a credit card, which lets you make purchases using money you don’t actually have, a debit card allows you to buy things using your own money. If you don’t have sufficient funds in your account, you can’t make a purchase. This means you can avoid running up a debt and incurring interest charges.
You need to link your debit card to your transaction account and use the funds in that account to make purchases. You can also use your card to withdraw funds from ATMs or from EFTPOS terminals when making a purchase.
How to choose the best debit card
When choosing a transaction account, it’s vital to consider the debit card that comes with it to help you decide on the best account for your needs. Fees and features differ between debit cards, so you need to compare different cards to find the one that suits your spending requirements.
For example, a debit card that provides unlimited fee-free access to your money in Australia may be ideal when you’re at home, but if it charges high overseas transaction fees, then it could leave a big hole in your balance on your next international holiday.
The right card will depend on what you want to use your card for, so let’s take a look at the best debit cards for different situations.
The best debit cards for accessing your funds whenever you want
A key feature of debit cards is the ability to access cash in your account through ATM and EFTPOS withdrawals. However, some cards charge fees if you use another bank’s ATM to withdraw money or if you exceed a specified number of withdrawals in any given month.
If you always like having cash in your wallet and you need to make regular withdrawals from your account, look for a debit card that doesn’t charge a fee for accessing your money.
Look for an account that offers unlimited fee-free withdrawals via ATM and EFTPOS around Australia. Choosing a bank with a large ATM network can also help you avoid additional charges for choosing another bank’s ATM.
Some debit cards impose a limit on the number of fee-free withdrawals you can perform each month, so make sure you’re aware of this limit before you choose a card.
If you want regular fee-free access to the money in your account, you might like to consider the ING Orange Everyday Account, which allows you to use any ATM in Australia for free when you deposit at least $1,000 per month.
The best debit cards for overseas travel
Another major advantage of debit cards is that they offer easy access to your funds anywhere in the world. Just like Visa and Mastercard credit cards, you can use your debit card to make purchases and withdraw funds at millions of locations around the world.
However, some debit cards charge high fees when you use your card overseas.
- Overseas ATM withdrawal fees. Some cards charge a substantial fee each time you make a withdrawal from an overseas ATM. This can become expensive in parts of the world, such as Southeast Asia, where the local economy is largely cash-based and you need regular access to your money.
- Foreign transaction fees. Watch out for cards that charge fees on foreign transactions. This could either be a flat fixed fee or a fee charged as a percentage of your transaction amount.
- Currency conversion fees. Many debit cards only allow you to make purchases in Australian dollars, so you may be charged a currency conversion fee every time you make a purchase in a foreign currency.
If you’re travelling overseas, look for a debit card that won’t slug you with high fees if you make purchases or withdraw funds during your journey. Some cards waive all overseas ATM withdrawal and foreign transaction fees while you’re abroad, and using them could save you hundreds of dollars on your next trip.
For example, the Citibank Plus Everyday Account does not charge any international transaction fees and doesn’t charge any ATM withdrawal fees if you use a Citibank ATM overseas.
ING have an impressive offer for people looking to use their debit card overseas. Not only does ING'S Orange Everyday Account charge no overseas ATM withdrawal fee, ING also offers a rebate on any ATM fee charged by the overseas ATM provider. They'll also waive the international transaction fee. To access this benefit, you need to deposit $1,000 each month, as well as make 5 or more card purchases a month (from March 1st 2018 only).
The best debit cards for online shopping
Just like a credit card, you can use your debit card to make purchases online. You can splurge on an online shopping spree without having to worry about running up a huge debt or incurring substantial interest charges.
However, one factor you should be aware of when making purchases online is that you may incur foreign transaction fees. Even if buying from a site with a .com.au web address, your bank could charge you a fee if the retailer’s bank is based overseas.
If you’re addicted to online shopping, it’s a good idea to look for a debit card that doesn’t charge any foreign transaction fees, such as the Citibank Plus Everyday Account.
The best cash back and rewards debit cards
When choosing a credit card, you should also consider the rewards program associated with the card. While debit cards linked to rewards programs and cash back offers are not readily available, there are still options available that will let you enjoy a range of benefits simply by using your debit card.
For example, if you open a Bankwest Qantas Transaction Account, you can use your debit Mastercard to earn Qantas Frequent Flyer Points on eligible purchases. And if you open an HSBC Day-to-Day Transaction Account, you can enjoy exclusive shopping offers at more than 1,500 retailers plus special privileges at over 27,000 outlets around the world.
Compare debit card rewards programs and cashback offers at finder.com.au to earn rewards for your debit card spending.
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The debit cards with the lowest fees
Another major charge to be wary of is the ongoing monthly fee that applies to your linked transaction account. Most transaction accounts charge a monthly administration fee, but some will waive this fee if you deposit a specified minimum amount into your account each month.
However, there are some transaction accounts that don’t have any monthly fees. For example, the NAB Classic Banking Account comes with a Visa debit card and does not charge any monthly fees.
Other things to consider when choosing a debit card
You have to link any debit card you select to a transaction account, so you will need to consider the features and benefits of that account as well as the pros and cons of its debit card. For example, does a monthly account-keeping fee apply? Are there any minimum balance or deposit requirements? Can you easily access funds through Internet and mobile banking or make contactless purchases using your phone? Remember to assess a wide range of factors to make sure you choose a suitable account.
You can also use some debit cards as a credit card, allowing you to access a line of credit as well as the funds in your transaction account. While this can create extra flexibility and spending power, be warned that high interest rates may apply to any debt you run up. Keep this in mind when choosing the right card for your needs.