What is a debit card?
A debit card is a payment card that is linked directly to the holder’s bank account. It allows the holder to transfer funds electronically to another bank account when making a purchase.
A debit card, also known as a “check card,” works like a credit card, but instead of drawing money from a line of credit, it automatically withdraws funds from a linked bank account. People can get debit cards from banks or credit unions when they open checking accounts.
A debit card combines the functions of checks and ATM cards. When a cardholder pays using a debit card, the funds in the linked checking account are automatically deducted.
Cardholders won’t get into debt as they do with credit cards, as there is no borrowing or repayment involved. They simply are accessing their accounts and money remotely.
A debit card is a safe and convenient alternative to using checks or cash, and it works with online and in-person purchases. Cardholders also can use debit cards at ATM machines when they need to withdraw cash, deposit checks, verify account balances and transfer funds between accounts.
Debit card example
Ms. Brown wants to buy a new pair of shoes online. She doesn’t like to use her credit card, as she doesn’t like having debts. So, she decides to contact her bank to ask about what options she has to make the purchase.
As mentioned above, a debit card is a payment card that allows the holder to make any purchase by using the funds available in a personal bank account linked to the card.
The bank’s customer service representative tells Ms. Brown that the bank can issue a debit card for her to make the purchase. The card can be used in any store that accepts credit cards or debit cards, whether offline or online. The bank’s representative says the card will be delivered to Ms. Brown’s house in two to three business days.
After she receives the card, she will have to activate it through the bank’s ATM or online banking system to assign a secret personal identification number (PIN) to it that helps protect her from any unauthorized use.