How does a Debit Card Work

A debit card works the same as a credit card when shopping and making purchases. The only main difference between a debit card and a credit card is that a debit card’s spending limit is the current amount of funds available in the checking or savings account linked to that debit card. Also when paying with a debit card, the transaction is billed right away and is taken from your actual bank account whereas a credit card purchase goes on a bill to be paid later with interest.

A debit card can be linked to checking accounts and savings accounts and almost always includes a PIN number for use while making purchases or withdrawing cash from an ATM. They are sometimes called Check Cards as well. However some cards issued by banks are only ATM cards which means they can not be used at places that accept credit cards. To determine if your bank card is also a debit card look for a credit card company name such as Visa or Mastercard on your card which means that any merchants accepting those credit cards will also accept your debit card.

Many people cite debit cards as being more secure then credit cards because they require PIN numbers and also as great for building financial responsibility by obviously limiting the spending amount to whatever is in the linked account. Also since a debit card transaction is paid by your current funds there is no interest associated with credit cards on your debit card purchases. Also many debit cards allow you to earn the same rewards and points as credit cards without the interest when you sign for your purchases.