What is a debit card?

Debit cards can mean carrying less cash around, protecting your funds and being able to use your hard-earned money easier for everyday purchases.

What is a debit card and how does it work?

Debit cards are payment cards issued by financial institutions and are linked to a deposit account — most often checking accounts. When you use your debit card for withdrawals or payments, you’re removing that amount of money from the linked account.

Debit cards can be swiped, tapped or inserted into point-of-sale (POS) terminals to make purchases. You can also use your debit card at an ATM to withdraw money or check your balance, make online purchases, pay bills and much more. Depending on your bank and phone, you can also add your debit card to your phone’s digital wallet for contactless payments.

Debit cards are protected by a personal identification number, or PIN, which is usually made up of a four-digit number. For most debit card transactions, you’ll need to enter your PIN to verify your identity. In some cases, the cashier or card reader may ask if you want to run your debit card as credit, which won’t require a PIN but instead a signature to verify your identity.

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Checking account vs. debit card

Checking accounts and debit cards aren’t the same thing, but they go hand in hand. Checking accounts are deposit accounts, which means they’re eligible for FDIC or NCUA insurance, which protects funds up to $250,000 in the event of a bank failure.

When you get a checking account, you almost always get a debit card tied to your checking balance. You can also set up direct deposits to send your paycheck directly to your checking account. You can then use your debit card without having to physically go to a bank or withdraw money from an ATM.

Debit card vs. credit card

The main difference between debit and credit cards is that using a debit card isn’t borrowing money. Debit cards only spend the funds available in a linked account.

Credit cards are tied to a line of revolving credit, which means you’re borrowing money up to a certain preapproved credit limit. You repay the borrowed amount later with interest — unless you pay the amount back in full before the end of a billing cycle. Credit cards and their balances are reported to the credit bureaus, whereas traditionally, debit cards don’t show up on your credit report.

Prepaid card vs. debit card

The main difference between debit cards and prepaid debit cards is that prepaid cards aren’t linked to a bank account. Prepaid cards require funds to be added and reloaded. Prepaid cards can do many of the same things that debit cards can do, such as make purchases and receive direct deposits.

In the long run, they’re more costly than debit cards, because they tend to have a lot of fees. Prepaid cards charge activation, monthly maintenance, reload and inactivity fees, among many more.

Quick look: Debit cards vs. other card types

Are debit cards safe?

Debit cards are considered safer than physical cash, since they’re PIN-protected. They also have a three- or four-digit security code on the back of the card, called a Card Verification Value (CVV), which can be used for other transactions. But if someone were to get a hold of your debit card, they could run it as credit, which skips the PIN prompt and would only require a signature.

Unfortunately, like any other card, your debit card’s information can be obtained through card skimmers, which are illegally installed at places like ATMs, point-of-sale terminals, or more commonly, fuel pumps. These card skimmers steal your card’s data, and then thieves use that data to create fake cards using your card’s information. The number of card skimmers has increased by 368% from 2021 to 2022, according to FICO data.

Although debit cards carry some level of fraud protection, allowing you to dispute fraudulent purchases with your bank, it can take a few weeks before funds are recovered. Also, you may be liable up to a certain amount, depending on your bank’s card agreement.

On a whole, credit cards are considered safer than debit cards. Banks tend to offer more protection on credit cards because if those funds are stolen, the money isn’t yours — it’s the banks. Credit card transactions also tend to take longer to go through, so you have more time to dispute a credit card charge than a debit card transaction.

How do I compare debit cards?

Most debit cards work the same way, so the main differences are going to be extra features like rewards and accessibility.

• The card issuer. Visa, American Express, Discover or Mastercard give you more flexibility in your spending options. The money is still withdrawn directly from your banking account, but you have the ability to purchase or withdraw money wherever that card is accepted.
• ATM accessibility. Debit cards are also used to draw money directly out of your account through an ATM. Consider the number of ATMs and associated fees before choosing a card.
• Security features. Check if your card comes with options to freeze or unfreeze your account and card from use.
• Rewards. Some debit cards are attached to checking accounts that offer rewards like cash back and discounts at your favorite stores.

Debit card fees

One way debit card companies make money is by charging fees. There are some ways to avoid bank fees, but you might not be able to dodge all of them.

• ATM fees. You may pay a $2 to $5 fee if you withdraw cash using an ATM outside your bank’s network — on top of a potential ATM operator fee. Other ATM transactions, like a balance inquiry or account transfer, can also incur fees.
• Overdraft fees. If you make a debit card purchase that exceeds your account balance, your bank may process the transaction and charge you about $35 per overdraft.
• Foreign transaction fees. Purchases and withdrawals made in foreign currencies or with a foreign merchant are subject to a foreign transaction fee — usually around 3% of the total transaction.

How do I get a debit card?

To get a debit card, you’ll have to open a bank account that comes with a debit card, such as a checking or money market account.

To get a debit card, you have to be at least 18 years old, though some states carry different age requirements. Many banks also offer debit cards for kids if they open a joint bank account with a parent or guardian.

Once you receive your debit card, follow the included instructions to activate your card. Your bank will provide you with a pre-selected PIN and instructions on how to change it if you want to.

Can I get a debit card with a savings account?

Unlike checking or money market accounts, savings accounts don’t come with debit cards. However, some offer ATM cards, which allow you to withdraw money or check your balance at an ATM.

If you want a debit card that’s attached to your savings, look at money market savings accounts, which are a bit of a savings and checking hybrid. These accounts are interest-bearing and often with a debit card, so you can use it to make purchases while also earning interest on your balance.

Most Americans have a debit card

Most adults have a debit card, with checking accounts (90%) and savings accounts (77%) being some of the most popular financial products in the country.

Bottom line

Debit cards are a convenient way to make purchases and manage your cash. But depending on your bank, you could end up paying a fee to use yours. Keep an eye on your balance and understand the terms and conditions for your card to avoid paying more than necessary. To find a card with lower fees or better convenience, compare your debit card options against your needs and lifestyle.

Frequently asked questions

Do debit cards hurt your credit?

Debit cards aren’t added to your credit reports, because they aren’t tied to a line of credit. But if you have overdraft fees that are left unchecked, the bank may report those to ChexSystems, which could harm your banking history and prevent you from opening a bank account in the future. Negative balances could also be sent to collections, which could appear on your credit reports.

What do I do if my debit card is lost or stolen?

If your card is lost or stolen and it’s been used fraudulently, report it to your bank immediately so they can freeze or cancel your account and get a new card issued.