checking

Debit cards

When you open a checking account you can expect the bank to include a debit card or, as some banks call it, a check card.

These cards give you additional flexibility when it comes to paying for purchases.

Traditional ATM cards only allow you to withdraw cash or perform other transactions at an automated teller machine.

Debit cards let you pay for purchases in stores. The money is taken directly from your account. There's no "pay later" option with debit cards.

Debit cards at a glance

  • Money is deducted directly from checking account.
  • PIN-based cards provide protection against identity theft.
  • Liability if it's stolen: $50 if you notify bank within two days; $500 if you notify bank after two days.
  • Fees: Some banks charge for use of debit cards.
  • Returns can be tricky, because retailers treat transactions like cash.
  • It is better to buy online with credit than debit.
  • Be careful not to overdraw your checking account.

PIN versus signature

Some debit cards require a personal identification number, or PIN; others simply require your signature. A PIN-based or direct debit card removes the purchase price from your checking account almost immediately. These debit cards are typically accepted at supermarkets, gas stations, drug stores and superstores such as Wal-Mart.

A signature-based or deferred debit card has a Visa or MasterCard logo and is accepted anywhere Visa and MasterCard are accepted. Just as you would with a credit card, hand the clerk your card, sign the sales slip and you're done. The purchase price will be removed from your account in two or three days.

Some banks offer both types of debit cards, and some put both debit functions on the same card. When you swipe your card at the checkout line, the clerk will ask if you want to pay by debit or credit. If you select "debit," you'll need to key in your PIN. If you select "credit," you'll sign the sales slip.

Identity-theft protection

Consumer advocates often urge people to choose PIN-based direct debit cards only, since the PIN adds a layer of protection against identity theft. With a signature-based debit card, anyone could pick up the card and use it.

You have some federal protection if a thief gets your card and goes on a shopping spree, but you must act quickly.

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