Debit card transaction limits: Pros and cons

Debit and credit cards are among the best tools for financial empowerment. They offer cashless transactions, ensuring fund security through remote card blocking, and so much more. However, a 14 March 2023 Business Standard report shows that in 2021-22, there were 65,045 card and internet banking fraud cases, and the average fraud value is Rs 34,802 (as per Government data). 

It thus becomes essential for you to set up debit card transaction limits as an additional security measure and minimise the damage should your card be stolen or misused. 

The top 5 debit card transaction limits
 

1. International usage
 

The option allows you to enable or disable international transactions on your card. Unless you are travelling abroad or plan to transact on an international website, it is recommended that you disable international transactions. International transactions do not require a one-time password (OTP), so if someone uses your debit card or its details, they can transact on an international website easily. Therefore, disabling international usage unless you specifically need it is recommended.

Also read: Make overseas payments easier with international debit cards

2. Online transactions
 

You can enable or disable your debit card for online transactions from Ecom websites, mobile apps, and scanning QR codes. When this is enabled, you can set a debit card transaction limit. When the bank issues the debit card, it has a maximum daily purchase limit. You can keep this limit or lower it for online transactions. For example, the bank may issue a debit card with a daily purchase limit of Rs 5 lakhs; you may keep this limit or reduce it to Rs 50,000 or Rs 1 lakh if you wish (up to a maximum of Rs 5 lakhs).

3. Offline transactions
 

You can enable/disable your debit card for offline transactions too. Set a debit card transaction limit for in-store purchases or any other that are made from a POS machine.

4. Contactless transactions
 

This option allows for tap-and-pay transactions. The limit for contactless transactions is up to Rs 5000 for a single transaction. These do not require an authentication PIN. For transactions above Rs. 5000, you can TAP and enter your PIN.

5. ATM withdrawals
 

When enabled, you can set a limit on how much cash you can withdraw from an ATM.

Also read: Secure Banking tips to protect you from cyberbanking fraud​​

Pros and cons of setting debit card transaction limits
 

There are several advantages and disadvantages of debit card limits. The pros or advantages of debit card transaction limits include -

1. It enforces self-control
 

When you impose a spending limit on your Debit Card, it helps you control overall expenses. With a debit card transaction limit in place, you are less likely to make impulsive purchases. The purchase won't go through when attempting a transaction above the debit card transaction limit. It helps by making you a little more cautious about overspending, thereby helping you manage your finances better.

2. Enhanced security
 

Security is the most significant advantage of setting debit card transaction limits. Imagine a scenario where you lose your debit card or it is stolen. If it falls into the wrong hands, that individual cannot use the card for an amount higher than the set limit. If they attempt a transaction for a higher amount, the debit card payment will be declined. So, setting up debit card transaction limits is essential to minimise financial damage in the case of theft or misuse.

3. Responsible financial behaviour
 

Debit card transaction limits make you cautious about big-ticket spending. It encourages responsible financial behaviour. With spending limits in place, you can adhere to your budget.

4. Ease of usage on contactless transactions
 

It is super-easy to transact via contactless transactions. Just tap and pay. No PIN is required for transactions below Rs. 5000.

The cons or disadvantages of debit card transaction limits include -

1. Inconvenience during large purchases and emergency
 

Lower debit card transaction limits can be inconvenient for large purchases. Should you have to make a planned purchase with an amount higher than the limit, you need to modify the limit. With an increased limit, you can complete the transaction and will need to lower the limit again.

Modifying the debit card transaction limit to a higher amount can be difficult during emergencies. For example, spending time modifying the limit can be a hassle if there is a medical emergency. The same issue can arise when making an unexpectedly expensive purchase. For example, a crisis may require travel at short notice, where you may have to book flight tickets that may be higher than the transaction limit. 

2. Limited scope for earning reward points
 

Several banks give reward points on debit card transactions. The higher the amount you spend, the more reward points you earn. However, debit card transaction limits limit your scope to earn reward points in a single transaction.

Also read: Top 10 technology trends for enhanced security in digital banking​​

Debit card transaction limits: A boon in disguise
 

The pros of debit card transaction limits outweigh the cons. The limit increases the likelihood of achieving financial goals by helping you develop a responsible financial mindset. So, it is wise to have debit card transaction limits in place. It will also ensure that the financial damage is limited in case of a breach.

IDFC FIRST Bank offers account holders a variety of debit cards with their Savings Accounts. All cards have the functionality to set transaction limits. You can enable or disable transactions for international spending, online/offline purchases, contactless banking, and ATM withdrawals quite easily. When you decide to enable any or all of them, you can set transaction limits for each.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.