Compare bank accounts with debit cards

If you’re soon approaching the time where you need to set up your very first bank account, you need to firstly understand the tools you will be given to be able to access and manage your money, and the features that each one offers. 

The most popular method of being able to access your money is through a debit card issued by the financial institution where you choose to keep your funds. 

This card will be issued to you soon after you open a bank account (sometimes referred to as a transaction account), and how you can then access and spend your money will be determined by the terms and conditions set out by the card provider. 

A debit card allows you to: 

• Withdraw cash from your provider’s branch or automatic teller machines (ATMs) 
• Make purchases with retailers who have EFTPOS (electronic funds transfer point-of sale) machines by using your own PIN (personal identification number), or through payWave or PayPass 
• Manage your money by being able to make deposits, monitor payments and spending and check your account balance 

All Australian banks and financial institutions offer a range of different features attached to debit cards which you need to compare when you’re selecting the most appropriate one for your circumstances, based on your own financial goals and lifestyle. 

The key features to consider are: 

Fees 

You need to look at all the fees attached to the account and the card to determine what will be most cost-effective for you. Look out for establishment fees, any ongoing account fees and transaction fees which may come into effect at certain usage levels. 

Interest rates 

If your debit card becomes overdrawn at any point, an interest rate is usually then applied to the amount and must be repaid on top of the overdrawn amount, so that your balance returns to at least $0. 

Security features 

Your card will have a unique PIN attributed to it, which is either allocated by the provider or set by you, as well as a card verification value (CVV), which is a three- or four-digit number found on the back of your debit card to help reduce fraud, by proving you have the actual card with you when you purchase. 

PayPass or payWave 

Some card providers will offer either of these instant transaction mechanisms so you’re able to use the card for purchases under a certain amount of money at an EFTPOS machine, simply by tapping the card. 

Rewards programs 

If you’re looking at a card that incorporates Visa ‘s payWave or Mastercard’s PayPass, you may also be able to access the rewards program attached to each one, by accumulating points through your transactions which then go towards a range of cash, flights, gift or shopping discount rewards. 

Overseas use 

If you need to use your card and account outside Australia, you need to look closely at what the foreign currency conversion costs may be on the card and whether there are any other additional fees attached to that use. 

Joint accounts 

If you’re looking at setting up an account and card for multiple people to use, so that you can manage joint costs such as household expenses, you need to look at what the conditions are that come with the card and ensure each person is aware of their individual responsibility. 

Debit cards only allow you to access your own funds – they do not allow you to borrow funds, as you would with a credit card. 

Credit cards attract an interest rate on balances not repaid in full by the stipulated time, which must be paid back through regular interest repayments. 

The benefit of a debit card is that you have the same level of accessibility to your funds, but you don’t have to repay any additional money borrowed on credit (unless you overdraw your debit account). 

For that reason, you are not required to have a credit rating in order to have a debit card, but you will be subject to a credit rating check on your financial history if you apply for a credit card. 

A credit rating takes into account your history of managing any credit products and determines how worthy you are to have credit extended to you by a credit card provider. 

Many people choose to progress from having a debit card to applying for a credit card, often because they may require more flexibility to manage their financial commitments in relation to assets or their lifestyle. However, the responsibility of having a credit card should not be considered unless you have shown continued discipline in relation to spending and the management of finances associated with your debit card and account.