Homework 5.5 (23-24)

Debit Cards

What Is a Debit Card?

A debit card is a payment card that deducts money directly from a consumer’s checking account when it is used. Also called “check cards” or "bank cards," they can be used to buy goods or services; or to get cash from an automated teller machine or a merchant who'll let you add an extra amount onto a purchase.

How a Debit Card Works

A debit card is usually a rectangular piece of plastic, resembling any charge card. It is linked to the user's checking account at a bank or credit union. The amount of money that can be spent with it is tied to the account size (the amount of funds in the account).

In a sense, debit cards work as a cross between ATM cards and credit cards. You can use them to get cash from a bank's automated teller machine, as with the former; or you can make purchases with them, like the latter. In fact, many financial institutions are replacing their plain vanilla, single-purpose ATM cards with debit cards that are issued by major card-payment processors such as Visa or Mastercard. Such debit cards come automatically with your checking account.

Whether being used to obtain cash or to buy something, the debit card functions in the same way: It draws the funds immediately from the affiliated account. So, your spending is limited to what’s available in your checking account, and the exact amount of money you have to spend will fluctuate from day to day, along with your account balance.

Debit cards usually have daily purchase limits as well, meaning you can't spend more than a certain amount with them in one 24-hour period.

Debit card purchases can be made with or without a PIN. If the card has a major payment processor’s logo, it often can be run without one, just as a credit card would be.