What is a Debit Card?
A debit card is a plastic card that functions like a check and is used much like a credit card. The two main types of debit cards are branded Visa and Master Card.
Whenever you use a debit card to pay for a purchase, the amount is deducted immediately from your checking account. Debit cards offer convenience as well as security.
Most ATM cards also function like debit cards. Debit cards work similarly to credit cards, but the money is taken directly from the connected bank account rather than being added to your credit card bill. You can only pay with the debit card if you have enough cash in your account to cover the purchase, or you may overdraw your account or need expensive overdraft protection to kick in.
How Do Debit Cards Work?
When you’re using your debit card for purchases, you may have a choice of using it as a credit card. The main difference in this situation is whether or not you’ll have to enter your PIN when you check out. If you use it as a debit card, you may be able to get additional cashback with your purchase.
Don’t be confused by the Visa or Mastercard logo on your debit card; it is not a credit card. No matter which way you use this card, the money will come straight out of your bank account immediately.
How to Get a Debit Card
Open a checking account. Almost every bank and credit union offers free debit cards to new checking account holders. Make sure your PIN is set up for using the ATM and for making purchases by following the instructions you’re given.
Prepaid debit cards are an option to consider. Prepaid debit cards, which also allow you to make purchases in places like Walmart and Target, are an alternative if you don’t have a bank account.
See other related products and accounts. Secured credit cards might be better for you if you’re trying to build credit. You can also choose a second chance checking account if you are unable to open a regular checking account.
Debit Card vs. Credit Card: Main Differences
Users of debit cards are required to pay right now, since they draw money from their checking accounts for purchases and ATM withdrawals.
With a credit card, you can pay for your purchases later. The credit card issuer is essentially lending you money with the understanding that you will repay it at the end of your statement period.
Debit Card vs. Prepaid Debit Card: Main Differences
When you make a purchase or withdrawal from an ATM, your regular debit card makes a real-time transaction from your bank account, while prepaid debit cards need to be loaded in advance with cash, checks, online transfers, or in-person purchases.
People who don’t have a bank account but don’t want to use cash for their online purchases can benefit from pre-paid debit cards. It is important to remember, however, that prepaid cards do not build credit.
Debit Card vs. ATM Card: Main Differences
While a debit card can be used for both purchases and withdrawals from an ATM, a typical ATM card can only be used for cash withdrawals.
In the case of ATM cards with a Visa or MasterCard logo, however, the card functions like a debit card and makes immediate withdrawals from your bank account.
Typical Debit Card Fees
Transactions with debit cards are not always free. Be aware of the following fees:
Out-of-network ATM fee: It usually costs around $3. You may experience this if you use an ATM that isn’t on your bank’s network.
Foreign transaction fee: Typically 1% to 3% of the transaction amount. When you make purchases or make withdrawals from an ATM outside of the United States, this can happen.
Overdraft or non-sufficient funds fee: An online bank or credit union usually charges less than $35. This occurs when you spend more than your checking account balance.
Monthly fees: There are some banks that charge monthly account maintenance fees for checking accounts, as well as debit card holders. In most cases, these fees will be waived if a certain amount of money is deposited into your account on a monthly basis or if you maintain a minimum balance.
Debit card replacement fee: There is usually a small fee, sometimes no fee (expedited deliveries may be more expensive). In this case, the card has been lost or stolen, and a replacement has to be sent.
Frequently Asked Safety & Security Questions
1. How To Prevent Debit Card Fraud?
Debit card fraud can be harder to recover from than credit card fraud. After all, cash gets immediately taken from your account with a debit card, meaning you’ve already lost money by the time you notice fraud. If you don’t act quickly, it may be harder to recover the full amount stolen. That’s why it’s crucial to monitor your bank accounts and make sure all the transactions are yours.
2. What to Do If Your Debit Card is Stolen?
If your debit card is lost or stolen, reporting it within two business days will limit your losses to $50 by law (though some banks may refund the full amount of the fraudulent charge).
Waiting longer than that can bump your potential losses up to $500. If your card isn’t missing, you have sixty days from the day your bank statement was sent or posted online to report fraudulent transactions for full protection.
3. Can Someone Use Your Debit Card If Without Having It?
Thieves may attach skimmers (sort of like data recording devices) to ATMs to capture your debit card information, then use it to make purchases. Nonsecure websites, those with addresses that start with http rather than https, make it easier for unscrupulous people to steal your debit card data.
4. How To Keep Your Debit Card Safe?
To keep your debit card as secure as possible:
- Stick with bank ATMs, as their constant surveillance may better deter skimmers
- Change your PIN regularly and keep it protected by never writing the number down
- Use your debit card as a credit card when shopping to avoid entering your PIN in public
- Never use your debit card online with public Wi-Fi
- Pay attention to your bank statements and current transactions
- Report anything suspicious immediately
Taking these steps will help keep your debit card more secure and protect your bank account from fraudulent withdrawals.