What is a debit card?

 

A debit card is a means of paying for things. When you open a checking or checking account, your bank or credit union gives you a debit card. Sometimes you are not charged anything for using a debit card. Other times you will have to pay a fee.

Debit cards are similar to credit cards. But they don't work the same. A credit card uses borrowed money. A debit card uses the money you already have in your account.

Why should you use a debit card?

Debit cards allow you to buy things without having money on you. You can use your debit card at most stores to pay for purchases. Simply swipe the card into a device and enter your PIN number on the keypad.

When you use your debit card, the money is immediately withdrawn from your checking account.

Debit cards allow you to access cash quickly. You can use your debit card at an ATM to withdraw money from your checking account. Plus, when you use the card to buy something at a store, it can give you back cash.

What is a PIN?

A “PIN” is your security code. PIN stands for personal identification number. A bank or credit union gives you a PIN when they give you a debit card. You can change your PIN to another number that you can remember.

When you use your debit card you will have to enter your PIN on a keypad. This is one of the ways the bank tries to prevent dishonest people from using your debit card to withdraw your money.

Never tell anyone your PIN. Learn it by heart. Do not carry it written down in your wallet or on your card.

How do debit cards work?

Your bank or credit union usually gives you a debit card when you open a checking or checking account.

With a debit card, you can spend money from your checking account without writing a check.

You can use your debit card to buy things at a store.

You can use it to withdraw cash from an ATM.

When you pay with a debit card, the money is immediately withdrawn from your checking account. After that you don't have to pay any bills.

How can I find out where I used my debit card?

Every month, your bank or credit union will send you an "account statement." In your account summary you can see:

Where and how much you paid with your debit card.At which ATM you withdrew money, how much you withdrew, and whether you paid fees.Who you paid by check and the amount of the check.Your account statement can help you track your spending and budget.

 

What are the differences between a debit card and a credit card?

When you buy something with a credit card, you are borrowing money from the credit card company. Every month, the credit card company will send you a bill for the amount of money you borrowed to buy things.

When you use a debit card, you buy things using the money in your checking account.

For example, with debit cards:

You can get a debit card when you open a checking account at a bank.When you pay with a debit card, the money is immediately withdrawn from your checking account.When you pay with a debit card, you don't pay extra money in interest.You can use your debit card at an ATM to withdraw money from your checking account.Using a debit card does not help you establish a credit history.

With credit cards:

You have to apply for a credit card at a bank or at a store.When you pay with a credit card you get a bill once a month for all the things you bought.If you don't pay your credit card bill in full each month, you may have to pay an extra amount in interest.You can use your credit card to pay for your purchases online because it is a more secure means of payment.Paying the full amount of your monthly credit card bill on time can help you establish a credit history.

Can I use my debit card to buy things online?

Your debit card works online. But debit cards are not a good means of payment to buy online.

If you buy something on the internet, it is safer to pay with a credit card:

If you have a problem with something you buy online, it's easier to get your money back if you paid for it with a credit card.Someone could steal your credit card number online. If you report it right away, the law says you can only lose $50.Someone could steal your debit card number online. The thief could withdraw all the money from your bank account.

What if I used all the money in my checking account?

You may not have enough money in your checking account. This means that the payment with your debit card will be "declined". You won't be able to buy anything.

Some banks and credit unions may authorize "overdraft protection." This means you can use your debit card even if you don't have enough money to pay for what you're buying. But you may have to pay a fee to the bank. Some banks may apply this fee to each of your purchases until you deposit enough money in your account to pay for what you bought.