Debit Cards On Savings Or Transaction Accounts: Which Is Better?

Many credit unions are offering debit cards when you have a savings or transaction account with them. Which account is better for debit cards? Find out in this article.

In the past, debit cards were provided when you had a transaction account, but they are now being offered with a savings account as well at some major banks. There are pros and cons to having a debit card linked to a savings account. The most important thing you need to know is it can cost you a lot more money when you have it linked up to this type of account.

Debit cards linked to a savings account

Debit cards have commonly been linked with transaction accounts, which have low interest rates, or none at all. The owner of a transaction account usually has a fee to pay which is charged for every transaction made or charged as a monthly fee.

Debit cards can be used for other types of accounts such as mortgage offset accounts, home loans and savings accounts. They are different from EFTPOS, checks and ATM withdrawal cards because it is the vendor that pays for the transaction processing, not the account holder or the bank.

Having a savings account means that you want to earn interest on your money by letting it sit and grow as you gradually add money to it during the years. It is not meant to be used for many transactions, and most banks will penalize you for making too many transactions through the account. They have been designed to be a tool for long-term investment. Some savings accounts features highly discourage customers from taking money out of the account.

Some banks will charge very high transaction fees for taking money out of the account. If you have a savings account that charges withdrawal penalties, they will apply to any transactions you make with your debit card.

Many banks still do not offer a debit card that is linked to a savings account, but these banks may allow you to link it up to a debit card if you already have a card that is linked to a transaction account. In this case both the savings account and transaction account can be linked to one debit card.

The one good point about having debit cards linked to savings accounts is its usefulness in the case of an emergency. If your vehicle suddenly breaks down it is nice to know that cash is available in the savings account, especially if the transaction account doesn’t have enough funds in it to cover the costs.

As you can see, you’re much better off having your card linked to a transaction account instead a savings account in most cases. You’ll save money in the long run as long as you keep the balance in your transaction account high enough to handle any emergencies.

Transaction Accounts Comparison

Savings Account	Account Details	Maximum Variable Rate p.a.	Standard Variable Rate p.a.	Bonus Interest p.a.	Fees	Min Balance/Min Deposit
HSBC Day to Day Transaction Account	Get $10 every month, No monthly account keeping fees, plus unlimited ATM withdrawals and EFTPOS transactions	0.00%	0%	0.00%	$0	$0 / $0
NAB Classic Banking	Zero monthly fees and no minimum deposit required. Receive the NAB Visa Debit card at no extra cost.	0.01%	0.01%	0.00%	$0	$0 / $0
Citibank Plus Transaction Account	No monthly fees and unlimited transactions free of charge.	0.00%	0.00%	0.00%	$$0	$0 / $0