Everything you need to know about debit cards

By Gisele Goes

A debit card is one powerful piece of plastic. With one, you can spend with a swipe, shop online, and get cash from any ATM in the world.

But like any financial tool, debit cards must be used responsibly. When anything you want is a tap away, overspending is easy. A lost or stolen card can lead to identity theft.

Whether you’re wondering “What’s a debit card?” or looking for a refresh on the debit card vs. credit card divide, our guide has you covered. Let’s get started. 

What’s a debit card?

Like cash, checks, and credit cards, debit cards let you pay for things. But before you apply for or use your debit card, it’s important to understand how it compares to other payment options:

  • Your debit card is connected directly to your checking account.

When you use it to make a purchase, your card tells the merchant to deduct the total from your account. Cash transactions come out of your pocket. Those made with credit cards let you borrow the money from your provider, which you agree to pay back at a later date.

  • Your debit card provides free or low-cost ATM access.

If you want to withdraw cash from an ATM, you’ll need either a credit card or a debit card. Credit cards, however, typically charge a cash advance fee of 3-5% of the transaction. Chime debit cards let you withdraw funds from more than 38,000 fee-free MoneyPass® and Visa® Plus Alliance ATMs.

  • Your debit card is flexible. 

With cash, you have to physically hand someone the money to make a purchase. With a card, you can swipe, tap, enter digits, or even leave your wallet at home if you have it hooked to a mobile payments app. Chime supports the three top mobile payment platforms: Apple Pay™, Google Pay™, and Samsung Pay. 

  • 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.

Chime debit cards can be locked and unlocked in the app, with a separate locking system for international transactions. Real-time alerts let you know anytime your card is used. Plus, Chime cards are covered by Visa’s Zero Liability policy, ensuring you’ll never be responsible for unauthorized charges. Deposits to your Chime account are insured for up to $250,000 through its banking partners. 

The best part of debit cards? Since the rise of online banking, they’re easier than ever to get.

How to get a debit card

Also like credit cards, debit cards must be applied for. Fortunately, the debit card application process tends to be faster and easier.

To get one, you will need to first choose a provider. You could walk down the street to a brick-and-mortar bank, or you could get online and choose a mobile banking service. To decide, think through:

  • Fees and penalties

Traditional banks operate branches. To keep the lights on and pay staff, they collect fees. Between low-balance fees, account service fees, and overdraft fees, they can add up to a nasty surprise at the end of the month.

Mobile banking services like Chime have less overhead, so they generally charge fewer fees. Chime charges no overdraft penalties, foreign transaction fees, monthly fees, or minimum balance fees. 

  • Customer service options

Branch banking means a traditional customer service experience. If something is wrong with your card, you can walk into a branch and talk to a teller about it.

Most mobile banking services offer multiple different support options. Chime members can call or email customer support, send an in-app message, reach out on social media, or find answers to frequently asked questions online. 

  • Features and perks

Many mobile banking services are tech companies at heart, so they tend to have innovative features. Chime members with direct deposit can get paid up to two days early, for example. With the Round Up feature enabled, each purchase is rounded up to the next dollar, with the difference deposited in a linked savings account. 

Brick-and-mortar banks stick to traditional banking services like safe deposit boxes and cashier’s checks. Although many offer apps and online dashboards, they tend to be less robust than services made to be accessed digitally. 

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 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 — a personal identification number — that you can punch into ATMs and at certain merchants to complete transactions. 

Easy, right? Still, debit cards do come with some restrictions. A key one is age.

How old do you have to be to get a debit card?

Because debit cards are complex financial tools, they typically aren’t available to minors. Chime  requires that its members are at least 18 years of age.

Getting a card requires you to sign a legal contract. Many state laws and corporate policies restrict minors from entering into contracts. 

If you’re interested in getting your child a card, ask whether they’re ready for that kind of commitment. Consider their:

  • Age

Some banking services allow parents to jointly manage a checking account with a child. USAA, for instance, lets children as young as 9 have a debit card through its Youth Spending accounts. Parents must open the account and can monitor their child’s spending online. Others require children on joint accounts to be at least 13 or 16 before they can get a card in their name.

  • Needs

Is your teen going on a school trip to Washington, D.C.? Unless you’re going with her, you’ll need to hook her up with some way to pay for her purchases. It may be safer for her to carry a card than a large stack of cash. Be sure to tell your banking provider where she’ll be so the card isn’t frozen for suspected fraud. 

  • Financial knowledge

If your son is interested in a career in business, it’s not a bad idea to get him some real-world experience. Getting him a debit card can help him understand basic financial principles: how easy money is to spend, how difficult it is to earn, and how to spend securely. 

If you’re convinced your son or daughter is ready, talk to your banking provider. Make sure you understand the restrictions placed on his or her card. Ask how they’ll change when he or she turns 18: Will withdrawals and transfers be allowed automatically? Will fee waivers be affected? 

If your banking service isn’t willing to issue your child a debit card, a prepaid card could be a good alternative. Just watch out for prepaid card fees: Many come with a base fee and a monthly fee, which quickly eat away at the balance. They also lack key debit card features, such as fraud protection and spend analyzers. Despite those differences, prepaid and debit cards both provide the experience of paying with plastic. Behind the scenes, the two work in similar ways.

How does a debit card work?

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.

Think of your card’s payment network as a delivery person. Visa doesn’t pay for purchases made on cards in its network any more than a UPS worker pays for the packages he or she delivers. The payment network merely moves the data between its vendors and banking partners. 

Once your card’s payment network makes contact with your banking provider, a pre-authorization hold is added to your account. A pre-authorization hold means that the banking service reserves the transaction amount in your account for transfer to the merchant once the transaction is authorized. In your account dashboard, you’ll see these holds in a category titled “pending.”

Hold periods differ by bank. In most cases, pending transactions are resolved within three to four business days. If you swipe your card at a vendor like a hotel, a hold larger than the purchase price may be added to your account. Because you may incur more charges as you use the room, the hotel wants to be sure you have additional funds to cover incidental costs. 

Because the final amount may be much larger than the initial charge, some hotels and car rental agencies only accept credit cards. If you plan to book without a credit card, be sure you have at least a few hundred dollars extra in your account to ensure your debit card isn’t declined for a hold beyond your current balance. 

Credit and prepaid cards use the same system of payment networks and authorizations. The difference is, a debit card withdraws directly from your spending or checking account. That can keep you out of debt, make budgeting easier, and encourage healthy financial habits. 

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. The mobile banking movement means you have more choices than ever before.

Although this guide contains all the information you need to use a debit card responsibly, think carefully before getting your child a card. He or she might be ready for it, but age, circumstances, and maturity are important to consider.

If you do, help him or her understand how the card works. It’s not just a piece of plastic; it’s a pocket-friendly key to your financial life. 

Banking services provided by The Bancorp Bank or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card is issued by The Bancorp Bank or Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. The Chime Visa® Credit Builder Card is issued by Stride Bank pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see back of your Card for its issuing bank.

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