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What Is a Debit Card and How Is It Used?

May 24, 2018
Banking, Banking Basics, Checking Accounts
What Is a Debit Card and How Is It Used?
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What is a debit card?

A debit card is a plastic payment card that draws money directly from a checking account. It’s a safe and convenient alternative to cash, and works for in-person and online purchases as well as to withdraw money at ATMs.

» Best debit cards: The best debit cards are from banks with fee-free ATMs and other perks. Skip ahead to see our debit card recommendations

Debit cards work with Apple Pay and other mobile payment platforms as well as with many money transfer apps such as Venmo and Square Cash.

How does a debit card differ from other bank cards?

Prepaid debit card
Pay before: The card requires you to load money via cash, checks, direct deposit or a bank account before paying for transactions
Debit cardPay now: The card uses money directly from a checking account for purchases or ATM transactions
Credit cardPay later: The card lets you borrow money from a bank, so you pay the money back later

» Want to compare options? See our list of the best prepaid debit cards

What are the fees?

Debit card transactions are not always free. Here are some costs to watch out for:

Out-of-network ATM fee
  • Usually $2 or $3
  • Occurs if you use an ATM that isn’t in your bank’s network
  • Foreign transaction fee

    See what big banks charge
  • Usually 1% to 3% of the transaction amount
  • Occurs if you make purchases or ATM withdrawals outside the U.S.
  • Debit card replacement fee
  • Generally a small fee, sometimes free; expedited delivery may cost more
  • Occurs if card is lost or stolen and you need another one mailed
  • Overdraft or non-sufficient funds fee

    See what big banks charge
  • Around $34, often lower for online banks and credit unions
  • Occurs if you spend more than you have in your checking account
  • How to get a debit card

    Most banks and credit unions give you a free debit card when you open a checking account. Activate it by following the instructions you’re given and set up your PIN for ATM and purchases.

    » Ready to get one? Here’s how to open a bank account

    What to do if your card’s stolen

    Call your bank immediately with the phone number on its website. You can be on the hook for charges made on a lost or stolen debit card, depending on when you report the loss or theft to your bank. Here’s the maximum you are responsible for based on when you report the loss or theft:

    • Before any fraudulent charges occur: $0
    • Within two business days: $50 limit
    • Within 60 calendar days: $500 limit
    • After 60 days: No protection

    Best debit cards

    Debit cards are available when you get a checking account. Here’s a close look at several checking options with debit cards that earn rewards or help you avoid fees.


    at Discover,

    Member, FDIC

    Discover’s Cashback Checking1

    • 1% cash back on up to $3,000 in qualifying debit card purchases
    Bank of Internet USA

    at Bank of Internet USA,

    Member, FDIC

    Bank of Internet USA’s Rewards Checking

    • Unlimited ATM fee reimbursements in the U.S.

    Charles Schwab Bank’s High Yield Investor checking

    • Unlimited ATM fee reimbursements worldwide
    • No foreign transaction fees

    Capital One’s 360 Checking

    • No currency conversion or foreign ATM fees
    • Ability to lock debit card from the mobile app

    at Simple,

    Member, FDIC

    Simple’s Fee-Free Checking Account

    • No overdraft or non-sufficient funds fees
    • Safe-to-Spend budgeting tool linked to debit card


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