• Money Matters
  • Banking 101

Using a Debit Card

When you open a checking account, the bank may offer you a debit card. You can use it to withdraw money from your account and purchase items. Here's how a debit card works.

The beauty of a debit card is that using it is simple. Instead of carrying a lot of cash around to make your purchases, you can use your debit card to make on-the-spot withdrawals from your bank account as you shop.

A Debit Card Lets You Use Cash from Your Bank Account

For purchases, a debit card is similar to a credit card, except the money is immediately deducted from your bank account. You can use your debit card to get cash from ATMs, or from merchants who give you "cash back"—a certain amount of cash handed to you on the spot. This amount is added to your purchase. You can also use your debit card to withdraw cash from your account at most ATMs, although some banks may charge a fee. Whether you use your card to get cash or make purchases, you will need to enter your personal identification number (PIN) to authorize the transaction.

It Is Also Accepted Like a Credit Card

Many debit cards can also be used like a credit card—in a way. While not all merchants accept debit transactions, most accept credit cards. If your debit card is accepted as a credit card—and not all of them can be—the money is deducted from your bank account within a day or so.

When a Credit Card Might Be More Useful

While debit cards are handy for everyday purchases, there are times when you might consider using a credit card instead. If you buy an item online with a credit card, you will have time to reverse the charge if something goes wrong or you return the item.

You might also choose a credit card if you are reserving something you won't actually pay for right away, such as a hotel room or a rental car. Some reservation systems place a "hold" on your account for the full cost of the future purchase. If you make the reservation using your debit card, this means that a certain amount of money in your bank account—often a hefty amount—is unavailable for you to use until you pay your bill. If you use your credit card, only a portion of your credit is tied up—not your cash.

Debit Card Tips

  • Become familiar with the bank's terms and fees.
  • If you allow over-limit withdrawals, be careful not to overdraw your account. You may quickly incur overdraft charges without realizing it.
  • Don't choose a PIN that is easy for a thief to figure out, such as your birth date. Never write your PIN on the back of your card.
  • Keep your receipts so you can check them against deductions from your account.
  • Review your bank statements closely.
  • Report a lost or stolen card immediately.

Debit cards combine the convenience of an ATM card with the convenience of a credit card. They are a great way to get immediate access to your money.

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