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What Is a Debit Card?

June 30, 2020
Banking, Banking Basics, Checking Accounts
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How does a debit card work?

Like a credit card, a debit card is a payment card that lets you make secure and easy purchases online and in person. Unlike a credit card, a debit card draws directly from your checking account. You’re not borrowing; the money on your debit card is your own. And you can use it to access your cash at ATMs.

» More from NerdWallet: See our picks for the Best Checking Accounts

Debit cards work with mobile payment platforms like Apple Pay, Samsung Pay and Google Pay, as well as with many money transfer apps such as Venmo and Cash App.

Even though cashless money transfers and payments have become more popular, 62% of banking consumers used a bank debit card in the previous three months compared to 32% who had used a payment app, according to a Mintel report[1].

What’s the difference between a debit and credit card?

Debit cards require users to pay now, as the card uses money directly from your checking account for purchases or ATM withdrawals.

Credit cards allow you to pay for your purchases later. You are essentially borrowing money from the credit card issuer with the understanding that you can pay the money back at the end of your statement period.

» Learn more about how credit cards work with NerdWallet’s Credit Cards 101

What’s the difference between a debit and an ATM card?

Whereas a debit card can be used to make purchases as well as withdraw cash from an ATM, a typical ATM card is used exclusively for withdrawing cash from a machine.

The exception is when the ATM card has a Visa or MasterCard logo, in which case it functions like a debit card and immediately withdraws funds from your bank account.

What’s the difference between regular debit cards and prepaid debit cards?

While regular debit cards perform a real-time transaction from your bank account every time you make a purchase or ATM withdrawal, prepaid debit cards require you to load the card in advance via cash, checks, online transfers or a visit to a retailer.

Prepaid debit cards can be a good option for people who don’t have access to a bank account but don’t want to use cash for their online purchases. Keep in mind, however, that prepaid cards don’t help you build credit.

Here’s how to get a debit card

  • Open a checking account. 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 use and purchases.
  • Consider a prepaid debit card. If you don’t have access to a bank account and want to try using a prepaid card instead, turn to NerdWallet’s list of best prepaid debit cards.
  • Check out other related products and accounts. If you want to build credit, a secured credit card may be a better fit for you. Or, if you’ve had trouble getting a regular checking account, opt for a second chance checking account.

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

Do debit cards charge fees?

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

  • Out-of-network ATM fee: Usually around $3. This occurs if you use an ATM that isn’t in your bank’s network.
  • Foreign transaction fee: Usually 1% to 3% of the transaction amount. This occurs if you make purchases or ATM withdrawals outside the U.S. (See what big banks charge.)
  • Debit card replacement fee: Generally a small fee, sometimes free (expedited delivery may cost more). This occurs if the card is lost or stolen and you need another one mailed.
  • Overdraft or non-sufficient funds fee: Around $35, but often lower for online banks and credit unions. This occurs if you spend more than you have in your checking account. (See what big banks charge for overdrafts.)
  • Monthly fees: Some banks charge monthly account maintenance fees for checking accounts and — by extension — debit card holders. However, these fees can usually be waived if you maintain a minimum balance or have a certain amount of money direct deposited into your account on a monthly basis.

Here’s what to do if your debit card is stolen

Call your bank immediately. 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.


Discover’s Cashback Checking

    • 1% cash back on up to $3,000 in qualifying debit card purchases.

Axos Bank®

at Axos Bank®,

Member, FDIC

Axos Bank’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 additional fees when using your debit card abroad.
  • Ability to lock debit card from the mobile app.

Simple’s Fee-Free Checking Account

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

Article Sources

1. Mintel. “The Banking Experience–US, Feb. 2019.” p. 30, Accessed Feb. 26, 2020.


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