Debit cards have dramatically transformed the financial landscape in the last many years since they came into existence, influencing to a great extent the way individuals access banking and financial services. It is basically a plastic payment card that can be used as a substitute for money in making payments. Any payment through a debit card takes place electronically, and a digital footprint is left behind in case details of a particular transaction need to be revisited.
In case of a debit card, while making a payment or a transaction, the money comes from your bank account linked to the debit card. Only if you have sufficient funds to make the transaction, the transaction through the debit card will go through. In case of insufficient funds, transactions on debit cards will not be successful.
The volume of debit cards has increased so dramatically that in several countries, traditional banking instruments like cheques, demand drafts and money orders have almost entirely been replaced or substituted. Debit cards have also paved the way for digital payments, and have become a crucial part of cashless economies that many countries are trying to incorporate for better financial management and most importantly, transparency.
Features and Benefits
Debit cards come with a host of features and benefits that make them quite an exciting phenomenon. Let’s delve into the most essential features and benefits associated with these cards:
- It work conveniently in the absence of cash. Payments through these types of cards are simple.
- It comes with built-in security features that prevent cloning and misuse.
- When you use your debit card to make a transaction, you will receive a notification from the bank, indicating that a certain amount has been deducted from your bank account and has been paid to source/merchant through your card.
- Just like credit cards, some debit cards also come with an annual fee. The annual fee, however, is lower in comparison to credit cards.
- In the case of debit cards, the money is deducted directly from your bank account. Debit cards are linked to your savings bank account or your current account.
- Transactions on debit cards don’t attract any charge of sorts. There is no interest charged either.
- It can be used to withdraw cash as well. These cash withdrawals, unlike credit cards, do not attract a separate charge. There is no interest involved in cash withdrawals either.
- It can be used to make transactions at Point of Sale (POS) machines (offline). No interest is charged on transactions made at merchant terminals.
- It can also be used to make online transactions. In the case of online transactions, you’ll be required to enter your card details including your debit card number, and your secure access pin (this is not the same as your 4 digit debit card pin for offline transactions). You can also make online transactions with your debit card pin (without requiring the secure access pin for online transactions).
- When you make an online transaction with your debit card, you will receive a notification from the bank, indicating that a certain amount has been deducted from your bank account towards the transaction that you’ve just made.
- It can also be used to make payments through electronic wallet systems.
- You can use your debit card to pay your monthly credit card bill. If the debit card you have is from the same bank that you have your credit card from, you can just visit the nearest ATM and pay your monthly credit card bill using your debit card. Note that this works in the case of other credit cards also – not just your credit card. For instance, if you have a credit card from a different bank, you can visit an ATM of the respective bank and make your credit card bill payment using your debit card.
- You can perform a wide range of transactions with your debit card, including paying for transport, make reservations online, make cinema bookings, and more.
Fees and Charges
The common notion about debit cards not attracting any fees, unlike credit cards, is misconceived. It also attract their own set of fees and charges, but these charges can vary from one bank to another, and the type of debit card in question. Let’s look at some common fees and charges associated with debit cards:
- Annual fee - You have to pay this fee every year that you choose to renew your debit card membership with the bank. Unlike credit cards, the annual fees charged on debit cards are lower (as low as S$5 p.a.). However, like credit cards, you can have the annual fee waived on your debit card.
- Foreign currency transaction fees - Similar to credit cards, overseas transactions made using your debit card attracts additional fees and charges. Foreign currency transaction fees will include a bank administrative charge and a fee charged by the payment network (such as Visa/MasterCard). Visa and MasterCard usually charge 1% of the transacted amount as a foreign currency transaction fee. Banks usually charge 1.8% of the transacted amount the admin charge (as charged by UOB, OCBC and DBS).
- Dynamic currency conversions - DCC charges are usually charged at the rate of 1% of the transacted amount by Visa/MasterCard. Banks may also levy an admin charge of such transactions.
- Overseas cash withdrawals - Though you do not have to pay a fee to withdraw money from your debit card account in Singapore, overseas withdrawals attract a fee. Usually, the minimum service charge for overseas withdrawals is S$5. The fee depends on the amount withdrawn from your account, for instance DBS charges a maximum of 3.25% of the transacted amount as the overseas withdrawal fee and OCBC charges 3% of the withdrawn amount.
- Transaction sales record/draft - You can obtain a copy of your Point-of-Sale (POS) transaction record/transaction history for the month from the bank. Usually, banks charge S$5 per copy (as charged by DBS/POSB, UOB).
- Service fees - Service fees are associated with your bank account (savings/current/cheque) and not your debit card directly. Some banks waive this fee (S$0), while others charge a small fee like S$2 (as charged by Standard Chartered).
- Card replacement fee - In the event that your card is lost/stolen and you need a replacement, you may be charged a card replacement fee (usually S$20 as charged by OCBC and UOB).
Additional Fees and Charges Associated with Transactions:
- The number of free debit card transactions you can have in month is also limited. Banks usually allow you to make 4-5 free transactions at ATMs (same bank ATM). Cash withdrawals from ATMs of other banks are charged a certain fee.
- No interest charges are levied on debit cards as already mentioned earlier.
- Most banks give you an annual fee waiver if you make a minimum number of transactions in a given calendar month. This varies from one bank to another.
Find Best Debit Cards in Singapore
How to apply Debit Card in Singapore?
- You can apply for a debit card in Singapore by visiting the nearest branch of your bank, and placing a request. You can also apply online.
- Usually, when you open a bank account with a particular bank – savings account or current account – you will receive a debit card from the bank. You don’t need to separately apply for a debit card in a case like this. You will, however, have to evince interest in the debit card. You can also turn down the debit card if you wish.
Note that banks won’t usually give you a debit card if you don’t have a bank account with the bank. Debit cards don’t work like credit cards in this matter. Unless you have a bank account with the bank, you won’t receive a debit card from the bank. If you have a bank account with the bank and wish to apply for a new debit card, you can cancel your current debit card (if you have one) and get a new one.
Also note that you don’t need to submit additional documents to the bank in order to apply for a debit card. If you already have a savings bank account or a current account, your credentials are already verified by the bank and your debit card will be given to you at the time of opening your bank account (or later, if you didn’t receive a debit card while opening your bank account).
How to Cancel your Debit Card?
You can cancel your debit card under the following two circumstances:
When you’ve applied for your debit card and haven’t received it yet:
If you’ve already applied for your card but haven’t received your card yet, you can cancel your card by contacting the bank’s hotline number and informing the bank about your intention.
If you’ve lost your debit card:
If you’ve lost your debit card or your card pin has been compromised, note that you will have to inform the bank immediately to prevent any sort of misuse. You will not be liable to pay any amount for a lost or stolen debit card, but if you wish to go for a replacement, you’ll be charged with a card replacement fee.
If you don’t inform the bank about the loss or theft of your card and unauthorised transactions take place on your card, the bank will not be responsible in any way. However, if you’ve informed the bank about the loss or theft of your card and unauthorized transactions have taken place, you will not be held responsible and the amount will be refunded to you.
In order to inform the bank, you can simply call the bank’s hotline number. Most banks run their hotline numbers 24/7, with service representatives always available to address queries and grievances.
Q. Will my credit score be taken into account if I wish to apply for a debit card?
No, credit scores will hold applicable in the case of credit cards. When you apply for a credit card, considering the fact that credit cards are credit products, your credit score should meet the bank’s internal credit standards if your application has to be approved. The same isn’t true in the case of debit cards. As long as you have a savings bank account, you can apply for a debit card and get one too.
Q. Can I apply for a debit card without maintaining an account with the bank?
No. In order to apply for a debit card, you must maintain a savings or current account with the same bank. Your debit card will be linked to this account.
Q. If I already have a debit card attached to my savings bank account, can I apply for an additional debit card?
Yes. If your account is a joint account, you will receive more than one debit card depending on the number of people holding the account. Even if you are the sole account holder, you can apply for an additional debit card. You just need to contact the bank in order to apply for a new debit card. Banks, however, mostly allow you to hold one debit card per account, and not multiple debit cards for the same account (especially if you are the sole account holder).
Q. If I wish to apply for multiple debit cards with different banks, do I have to open a separate account with each bank?
Yes. Each debit card you apply for must be linked to an account with the specific bank, i.e. you must open a bank account with the respective bank before applying for a debit card.
Q. How long does it usually take to receive a debit card after successfully applying for one?
It can take about 5-7 working days to receive your debit card after you’ve successfully applied for one.