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As cash becomes a thing of the past, debit cards are in everyone’s pockets. Chances are, anyone with a checking account has a debit card. From making purchases to paying bills and using an ATM, these cards play a crucial role in your everyday money habits.
What’s a Debit Card?
Debit cards are plastic payment cards that draw money from an individual’s checking account every time they are used. A debit card might also be called a check card, bank card, or ATM card. There are also several different types of debit cards and unique features you can explore.
Here are some key facts about debit cards you should know:
- Debit cards replace cash and checks.
- Debit cards can be used at ATMs to make withdrawals and check account details.
- You may or may not need to enter a personal identification number (PIN) to make a purchase.
- Debit cards have fees you should be aware of (like ATM transaction fees).
How Does a Debit Card Work?
Like cash, checks, and credit cards, debit cards let you pay for things. But with a debit card, the money comes directly out of your bank account when you use it. The card is connected to your account, and your spending limit is based on your available funds.
Whether you swipe your card or punch in its numbers online, you’re telling the merchant to deduct the total amount from your checking account. That communication happens through your card’s payment network. Chime uses Visa®, but other popular options include MasterCard, Discover, and American Express.
Once your card’s payment network makes contact with your banking provider, a pre-authorization hold is put on your account to reserve the transaction amount until authorization.
In-Person and Online Transactions
Debit cards can be used both in person and online.
When using a debit card in person, you will swipe, tap, or insert the card. In some cases, you will need to enter a PIN or provide a signature.
When using a debit card online, you will enter your card number, security code, and other details like the card’s expiration date and your zip code, to complete the online transaction.
In some cases, you may be able to use just your phone to make a debit transaction. This depends on what’s supported by your bank, credit union, financial institution, or financial technology company. For example, Chime supports the 3 top mobile payment platforms: Apple Pay™, Google Pay™, and Samsung Pay.
ATM Access
Your debit card provides free or low-cost ATM access. This allows you to take out cash, make deposits, and check account details while on the go. Just be aware of what ATMs are in your network and what fees might be involved.
Credit cards typically charge a cash advance fee of 3-5% of the transaction. Chime debit cards let you withdraw funds from more than 60,000 fee-free ATMs¹.
Safety and Security
Your debit card is secure. If cash is lost or stolen, it’s usually gone for good. Although credit and debit cards can be stolen, they come with some key security features to keep your money safe.
For example, Chime is equipped with a variety of great safety features, such as locking and unlocking your card in the app, transaction alerts, and much more. Be sure to explore what safety features are available with your debit card to keep your hard-earned money safe.
Card Fees and Penalties
Depending on where you open a checking account, you may need to pay some fees for your debit card. Fees might include:
- Low balance fees
- Account service fees
- Overdraft fees
- Transaction fees/foreign transaction fees
- ATM fees
Make sure you know all of the fees you might face before opening a checking account. After all, don’t you want to keep most of your own money? With Chime there are no hidden fees¹, so you can keep what you earn.
Features and Perks
Every debit card is going to have its own features and perks. With so many options out there, be picky when it comes to selecting a card and account that speaks to your financial wants and needs.
Another thing to consider: customer service. Things happen. Your card gets lost or stolen. You notice some suspicious activity. Or, you just need help figuring out the ins and outs of money management. Check out card options that prioritize you as a customer and give you help when you need it.
Debit Card Pros and Cons
As with any payment option, there are some benefits and drawbacks to consider when getting your own piece of plastic. Check out the table below for some key points.
| Debit Card Pros | Debit Card Cons |
|---|---|
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Ultimately, the pros usually outweigh the cons when it comes to a debit card. It offers a lot of conveniences and can make your everyday spending and money management a whole lot easier.
How to Get a Debit Card
First things first, figure out where you want to open an account. Once you’ve decided on a provider, you will need to complete an application. Be prepared to provide the following information:
- Your name, phone number, and email address
- Your home address
- Your social security number
- Your occupation
- Your birthday
If you are approved, the next step is to activate your debit card. In most cases, you simply need to call a phone number or pull up the app to confirm that you are, in fact, the authorized user. You’ll create a PIN you can punch into ATMs and at certain merchants to complete transactions.
Debit Card FAQs
Debit cards may seem simple at first glance, but there is a lot that goes into them! Read on for some more information about how debit cards work.
What does it mean if I have a pending transaction?
A pending transaction is a transaction a merchant hasn’t yet fully processed. This is often the case if you make a purchase on the weekend or outside of normal business hours. Pending transactions usually clear within 3 – 5 days, but it could take longer
What is a pre-authorization/authorization hold?
An authorization hold (pre-authorization or card authorization) is when a credit or debit card provider puts a certain amount on hold on your account. This takes the funds away from your available balance and holds them until a transaction is authorized and cleared.
How old do I have to be to have a debit card?
Usually, you have to be 18 years old to open a bank account and get a debit card. Some places allow younger adults and children to open accounts, but they often come with several restrictions.
Is a debit card an ATM card?
Sometimes debit cards are referred to as ATM cards because you use them at ATMs to take out cash. However, some ATM cards aren’t as flexible as debit cards, and you can’t use them outside of ATMs, like at a store, restaurant, or online.
The Bottom Line on Debit Cards
Debit cards are a flexible, secure way to access your money. But not all cards are created equal, and not just anybody can get one. Be sure you understand your options before applying for a card. It’s critical to know not just what a debit card is, but which one is right for you.
Take all of the details you’ve learned into account and go after what makes the most sense for you and your money. And remember — be picky! You deserve a debit card that’s going to get you excited about handling your money.