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What Is a Debit Card Exactly?

March 7, 2016
Banking, Banking Basics, Checking Accounts
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We adhere to strict standards of editorial integrity. Some of the products we feature are from our partners. Here’s how we make money.

Like a credit card, a debit card is a payment card that lets you make safe 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.

» 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 card: Pay now. The card uses money directly from a checking account for purchases or ATM transactions.
  • Credit card: Pay 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. 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 $34, 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.)

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.

BEST FOR REWARDS
Discover

at Discover,

Member, FDIC

Discover’s Cashback Checking1

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

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
BEST FOR AVOIDING OVERDRAFT
Simple

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

FAQs about debit cards

How do I avoid ATM fees?

You can use your debit card at an ATM in your bank’s network. Or, if that’s not an easy option, request cash back at certain retail stores when you’re at checkout.

What advantages do credit cards have over debit cards?

Unlike debit cards, credit cards can offer rich rewards, a way to build credit and greater protection against fraud. And if you pay your balance in full each billing cycle, they don’t cost you in fees or interest. (Read more about credit cards.)

Thinking of using your debit card as “credit”?

If you want to get cash back, choose “debit” and enter your PIN. Otherwise, the difference probably won’t affect you. A debit transaction processes faster than a credit transaction, but the exact timing depends on your bank. Using your debit card as “credit” usually requires your signature, but regardless of what option you choose, a debit card uses money directly from your bank account.

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