Why it’s important to cut back on using your debit card

The debit card can be so incredibly handy. You need something, you pop it into the machine and presto. You own that item.

Did you know that if you look in the wallet of 9 out of 10 Canadians you’ll find a debit card? And finding a debit machine has never been easier with more than 55,000 ATM’s across Canada.

Interac, an association founded in 1984 by the major banks for the purposes of generating ATM transactions, did a study recently. It was revealed that half of Canadians say debit is their favourite way to buy things and more than a third visit an ABM more than once a week.

The convenience factor, however can make it difficult to assist with those savings resolutions you may have made at New Years. When you use your card to make a purchase at a retail outlet, it doesn’t show you the balance; and let’s face it, seeing your balance always has a sobering effect when you’re making purchase decisions. It should be noted as well, frequent debits also mean potentially higher fees — and that can add up quickly.

Here are some important points to keep in mind when it comes to your debit card.

Minimize bank fees

Whenever possible, never withdraw money from any bank except your own, unless it’s an emergency. A little bit of organizing your route in the morning will always generate a machine that belongs to your bank. If you use another ABM you will be charged a fee from your own bank and a fee from the one you are using. Also, see if you can open a no fee account. Two leaders in this area are President’s Choice Financial and ING Direct. Both banks offer excellent choices when it comes to online banking services with no fees.

Do your homework

All the major banks have accounts customized to your debit card habits. For most of them, with a minimum $1,000 balance you can get a fee package that offers you unlimited debit transactions and online banking. Make an appointment with your bank, or at the very least pick up the phone. The major banks have knowledgeable customer service representatives who are well aware of the various accounts and services.

Give yourself a smaller daily limit

You can created a forced savings scenario by asking the bank to decrease your daily limit. This will stop you from making that second or third debit in a day to buy something you may not need.

Budget realistically

On Monday, take out a sum of cash your budget dictates and stick to it. But be realistic. Don’t give yourself a drastically low amount, thinking you’ll save that much faster. Honestly calculate how much you believe you’ll need. Then, and only then stick to it. Otherwise you’ll find yourself back at the ATM and your budget will be discarded for yet another week.

For more helpful tips go to PrudentFinancial.net