Debit Cards

A debit card is a financial tool that makes banking and spending money more convenient. However, you need to know the basics of how debit cards work and the best ways to use them.

What is a debit card? A debit card is linked directly to your checking account. You can use the card to get cash at an ATM. You can also use it to spend money anywhere that a debit card and/or a credit card is accepted. But, when you use a debit card you are not borrowing money (like you do when you use a credit card).  Instead, you are spending the money that you currently have in your checking account.

What is the best way to use a debit card? There are two ways to use your debit card to make purchases – debit or credit. While both ways spend the money you have in your checking account, they are different.

  • Debit transactions – Funds are generally deducted from your checking account almost immediately. Usually require the use of your PIN, and sometimes your bank may charge a fee for this type of transaction.
  • Credit transactions – This is a signature transaction and no PIN is required. More retail locations offer this form of payment, and some merchants may require a minimum purchase to use your debit card for a credit transaction. However, whereas a credit card typically gives you 30 days before the bill is due, using your debit card as "credit” will result in the funds being automatically deducted from your account in 2-3 days.

 

Tips for Using a Debit Card

Here are some important things to keep in mind when using your debit card:

  • Know the fees your bank charges for having and/or using your debit card.
  • Always know how much money you have so you don’t overdraw your account. Balance your account regularly. It should not be any different than keeping an updated check book register.
  • If you lose your card or it is stolen, report it to your bank immediately.
  • Save all of your receipts from debit card use. It can be hard to remember every time you use your card.
  • Memorize your PIN and do not write it on the back of your card.
  • Always use caution when using your card over the phone or online. Make sure you know exactly who you are giving your card information to, and use only websites that are secure.