What is a Debit Card? The Complete Guide

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What is a Debit Card? An Introduction

A debit card is one of the core resources individuals can use to make transactions. They’re issued by banks and work similarly to both an ATM and credit card. Also known as “bank cards” or “check cards”, a debit card deducts money directly from a customer’s checking account when used.

Unlike a credit card, you don’t borrow any money with a debit card when you’re spending, but use the existing resources you already have on deposit. The debit card can be used to buy goods or services in person, for cashback transactions and for online transactions.

Debit cards essentially eliminate the need for users to carry physical checks or cash to make purchases. However, they may have daily purchase limits. In some cases, debit cards will need users to enter a PIN code, but there are options to make contactless payments.

How Does a Debit Card Work?

Debit cards have relatively straightforward functionality. They partner with major credit card brands, such as Discover, Mastercard, and VISA, to allow individuals to use their existing checking account balance for payments online and in-person.

When using a debit card for an in-person transaction, most users will need to insert their card into a machine, swipe the cart, or use a contactless payment, similar to a credit card. In some instances, a personal identification number (PIN) will be necessary to complete the transaction.

Once a bank verifies the customer has the money to make a purchase, the transaction is approved. Looking at your bank statement, you may sometimes see a transaction identified as “pending”. This means the bank hasn’t transferred the money to the merchant yet, but the account may be debited.

When the bank sends money to the merchant, the transaction will appear as “approved”. When you use your debit card to get money from an ATM or make a purchase, you can complete the transaction because the necessary finances are already linked to your account.

Depending on the bank account, some users may be permitted to take more money than they have in their account using something called an “overdraft”. However, additional fees typically need to be paid for any money used in an overdraft.

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Debit Card Definition: The Types of Debit Card

Notably, there are various different “types” of credit card available, each with different unique features to offer. While most of these debit cards work in the same way fundamentally, the core difference is usually the entity responsible for issuing the card:

  • Regular debit cards: Standard debit cards are issued by a credit union or bank and are linked to a money market or checking account. They usually come with a Mastercard, VISA, or Discover logo in the US, and can be used for in-person or online purchases. These cards can also be used to make deposits and take withdrawals from an account at ATMs.
  • ATM Cards: Similar to most basic debit options, ATM cards are issued by a bank and linked to a specific account. However, they’re typically only used to make deposits at ATMs or get cash back. They usually can’t be used to make purchases in-store or online.
  • Prepaid debit cards: Usually a prepaid card linked to an owned bank account, but it might not be issued by that bank. These cards need to be loaded with funds for use. Most cards can be used in a similar way to a regular debit card, but some may have fees for certain services.
  • Electronic Benefits Transfer Cards: EBT cards are issued by government agencies to provide social benefits to users. For instance, programs like the nutritional assistance system pay benefits monthly to the card balance. Cardholders can use their card to pay for approved purchases with merchants that accept these cards.
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How Do You Get a Debit Card?

Acquiring a debit card is usually straightforward. Most financial institutions will issue a debit card with any checking account you open. In some instances, it may be necessary to request a debit card. After receiving a card, most users will need to “activate” it using a set of instructions.

During an activation process, a PIN is set for the card, which can be used for point-of-sale purchases. Anytime a cashback request is made during a purchase a Pin is also used. Additionally, you will need your PIN when withdrawing money from an ATM.

Users without an existing bank account can sometimes access pre-paid debit cards using several online services. Retailers such as Walmart also offer prepaid debit card brands, alongside major credit card companies like American Express, Mastercard and Visa. However, it’s worth remembering that these cards can sometimes come with monthly fees.

Notably, each bank does set minimum age limits for who can apply for a debit card. Depending on the bank and account type, it may be possible to open an account at an age as young as 13. However, these accounts may need a guardian or parent to be a joint account holder. When a person turns 18, they should be legally eligible to open a bank account in their own name.

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Fees for Debit Cards

Debit card fees are one of the many things users may need to be aware of when using one of these cards. While fees might not be necessary for everyday use, there are fees which apply to certain situations. Common types of fees include:

  • Account holds: When someone uses a debit card to rent a car or hotel room, they may have a “hold” placed on their account for more than the value of the transaction. This is usually a form of “deposit” which you will only pay if there’s an issue with the purchase.
  • ATM fees: The majority of banks will not charge for in-network ATM withdrawals. However, if a user accesses an ATM that isn’t in their bank network, they may need to pay a small fee for accessing a transaction.
  • Overdraft fees: If you overdraft an account when you’re making a purchase, you may need to pay a fee. These fees will be established by your provider in advance.

You may also incur a replacement fee if you need to get a new card when yours is lost, damaged, or stolen. Additionally, some banks and providers will charge fees when customers make a transaction in a foreign currency, or in a different country.

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Credit Card vs Debit Card

It’s worth establishing the difference between credit card vs debit card transactions. Notably, debit cards can be issued by credit card companies, which can lead to some confusion. There are also some other overlaps between debit and credit cards. For instance, both can sometimes offer reward and cashback programs which help users to save money.

Credit cards and debit cards do work fundamentally in different ways, however. Credit cards give users access to an available line of credit in order to make a purchase. Users will need to pay back the money they take from the credit line, with interest over time. Using a credit card is like borrowing a small amount of money in a loan.

Alternatively, using a debit card to make a purchase is simply like taking the money out of your existing checking account and offering the cash to the vendor. However, you don’t need to actually go to the ATM or bank to withdraw your money. You don’t carry a balance on a debit card that you need to pay back, because every time you use it, you’re accessing your own funds.

Debit cards purchases will not build up your credit history, and will usually process transactions in a couple of business days at most. There is a potential for a transaction fee with some retailers.

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Prepaid Card vs. Debit Card

Prepaid cards and debit cards also have some overlaps. They both use money that already belongs to you to manage a transaction. However, a traditional debit card is issued by your bank and links directly to your checking account, using the funds placed in your bank account to pay for any transactions. However, a prepaid card requires you to load funds into your account yourself.

You can sometimes use cash to pay for a prepaid debit card, electronic transfers, or checks. Funds can sometimes be loaded into an account online. Most of the time, prepaid debit cads are used by people who don’t have access to banking services. However, they may also be issued by employers and governments for social payments.

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ATM Card vs Debit Card

Both ATM cards and debit cards allow users to access funds in their checking account. However, their functionality is a little different. With an ATM card, it’s not possible to make purchases. Instead, you can simply use your card to make transactions at an ATM.

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Debit Card Pros and Cons

There are both advantages and disadvantages to debit cards, just like with any financial product. Debit cards are powerful financial tools which are excellent for saving you time and effort on transactions, but they can have some issues too. Debit cards are considered safe than cash, and make it easier to track where you’re using your money.

Stolen or lost debit cards can be reported to a bank, and the company can remove any fraudulent transactions and issue a new card. Debit cards are also easier to get than credit cards, even if you have poor credit. Plus, you typically don’t pay as many fees.


  • No annual fees: Debit cards generally don’t have any annual fees to pay
  • Convenience: you can use debit cards at millions of stores, online merchants and ATMS
  • Budgeting: You’ll be able to pay for transactions with your own cash, and avoid paying for any interest rates. Plus, you can track your purchases


  • Some fees: There can still be some fees attached to a credit card, such as maintenance fees and overdraft fees, as well as certain ATM fees.
  • Limitations: Your expenditure on a debit card will be limited to the money you actually have in your bank account, which means you can’t always buy big items.
  • Limited perks: Debit cards don’t have as many benefits or protections against fraud as a standard credit card.

It’s also possible for some people to accidentally overspend using a debit card, because it’s so easy to make a purchase without thinking, particularly with contactless payments.

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What Happens if a Debit Card is Lost or Stolen?

Debit cards are lost and stolen all the time. The easiest way to address this issue is to start by contacting the bank as quickly as possible and let them know what has happened. Some banks will even allow users to report missing cards online or via a mobile app. Sometimes, the bank will freeze the card, in case you find it, while other times, they’ll simply deactivate the cad and send a new one.

If a card is stolen, and debit card purchases are made, users need to report the card promptly in order to reduce their liability for fraudulent charges. If a card is reported as lost or stolen within 2 days, the user should only be liable for a maximum of around $50 in unauthorized charges. However, liability will rise to $500 if the card is not reported until after two days after it goes missing.

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Debit Cards FAQ

What are the features of a debit card?

Debit cards allow users to access money within their checking account to pay for goods or services. They come with PIN codes, and generally allow for online, in-person, and ATM (automated teller machines) transactions. Some cards can also offer cashback programs. Every debit card has a card number, and is usually linked to a current account rather than a savings account. Some debit cards can have overdraft protection included for your personal finance.

Are debit cards protected?

Most debit cards don’t have purchase protection like a credit card. However, they can still protect you if your card is lost or stolen. However, you are responsible for reporting your missing card rapidly in order to protect yourself from fraudulent transaction. You can usually track your purchases in real-time when making a direct deposit, buying a gift card, or making a transaction.

Where can you get a debit card?

You can get a debit card from any bank or financial institution online and offline. The process is usually straightforward, but most people will need to be over the age of 13. If you are under 18, you may need to have a parent or guardian sign up for the account with you. A prepaid payment card from a member FDIC might be an alternative for someone who can’t open a bank account.

What’s the difference between debit and credit payments

With debit-based transactions money is deducted immediately from a current account, or within a few hours. In credit transactions, the money goes towards a balance which must be settled in the future. Some debit cards may allow users to choose between debit or credit during a transaction.

How do you check a debit card balance?

Typically, only prepaid debit cards will have balances which can be checked via phone or online. Generally, the available cash connected to a debit card can be examined online, through a mobile banking account, at an ATM or in branch.

How long does a debit card refund take?

Debit card refunds typically take anywhere between 3 and 10 days to go back into an account from the date the refund is issued, however, processing time may vary according to the bank, merchant, and the transaction amount.

How do you cancel a subscription on a debit card?

Usually you won’t have to contact a card issuer to cancel a subscription to your current account. You can connect directly with the subscription provider. You can check your online banking portal and potentially cancel direct debits here too.

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Finishing Thoughts

Debit cards are an excellent tool for users who want to access the flexibility of paying with a card instead of writing a check. They’re suitable for both online and in-person use. However, it’s important for users to make sure they match the cards in their wallet with their spending habits, and keep track of any transactions that take place.

Unlike credit cards, debit cards typically help to protect the user from going into debit and paying massive interest fees. However, they can have some limitations when it comes to making large purchases.

Rebekah Carter

Rebekah Carter is an experienced content creator, news reporter, and blogger specializing in marketing, business development, and technology. Her expertise covers everything from artificial intelligence to email marketing software and extended reality devices. When she’s not writing, Rebekah spends most of her time reading, exploring the great outdoors, and gaming.

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