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Many of us swipe our debit cards when buying groceries, grabbing a morning cup of coffee, or filling up at the gas station.
In fact, debit cards are the most popular payment method in the United States. According to the 2022 Diary of Consumer Payment Choice, debit cards account for 29% of consumer payments.1
From making purchases to paying bills online to using an ATM, debit cards are crucial in our everyday money habits. But how do they work, and how do you get one?
What is a debit card?
A debit card is a plastic payment card that draws funds from your checking account when you make a purchase.
Debit cards are similar to ATM cards – also called bank cards – in that you can use them to make cash withdrawals at ATMs. But debit cards have more uses (you can spend them at stores, restaurants, online, etc.), and they share some functions with credit cards.
However, unlike credit cards, debit cards only let you spend the money in your bank account and do not impact your credit score.
New to using debit cards? Here are a few quick takeaways:
- Using debit cards: Debit cards let you withdraw cash from an ATM, make purchases at stores and restaurants, and even shop and pay bills online.
- PIN: Your debit card will come with a random personal identification number (PIN) when you receive it, but you can change the PIN to a number you’ll remember. (Just make sure it’s not easy for criminals to guess, like your birthday or 1234.) You’ll enter your PIN when making purchases to approve the transaction to add security to your account.
- Checking account: Debit cards are tied to your checking account – you can only spend the money you have. If you try to spend more, the card may be declined (and you may be charged a non-sufficient funds fee). If your bank allows overdrafting, you may still be able to complete the transaction, though there may be fees involved.
- Fraud protection: Debit cards have decent fraud protection under the Electronic Fund Transfer Act, but credit cards have even better protection. Most credit cards have “zero fraud liability,” which means that, no matter the size of a fraudulent payment, you won’t be accountable for any portion of the charges.
- Prepaid debit cards: Prepaid debit cards are not tied to a checking account, making them a helpful solution for people without bank accounts. But be careful: Prepaid debit cards often come with many fees.
How does a debit card work?
Like cash, checks, and credit cards, debit cards let you make payments. But with a debit card, the money comes directly from your bank account. Your spending limit is based on your available funds.
When you swipe your card or enter it online, you tell 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 contacts your banking provider, your bank will place a hold on your account to reserve the money until it clears.
Let’s break down how debit cards work a bit further:
In-person and online transactions
You can use debit cards in person and online:
- When using a debit card in person, you’ll swipe, tap, or insert the card. Sometimes, you’ll need to enter a PIN or provide a signature.
- When using a debit card online, you’ll enter your card number, CVV (the security code), and other details, like the card’s expiration date and your ZIP code, to complete the transaction.
You can add your debit card to a digital wallet and use your smartphone to make purchases if the merchant accepts mobile payments. Chime supports multiple mobile payment apps, including Apple Pay™, Google Pay™, and Samsung Pay.
Debit cards also make it easier to pay friends and family through peer-to-peer (P2P) payment apps like Venmo and Cash App. Chime has a built-in P2P payment feature called Pay Anyone.
Your debit card provides free or low-cost ATM access. This allows you to take out cash, make deposits, and check account details on the go. Just make sure you know which ATMs are in your network and be aware of any fees.
Chime debit cards let you withdraw funds from more than 60,000 fee-free ATMs.2
Safety and security
If you lose cash, it’s usually gone for good. But if your debit card is lost or stolen – or your data is breached via card skimming – you can tap into some helpful security features to protect your money.
For example, you can lock and unlock your Chime debit card in the app and get real-time transaction alerts every time the card is used.
You’re also protected by the Electronic Funds Transfer Act, which limits how much you’re liable for if your card is used without your permission. As an added Chime security feature, you’re protected by the Visa Zero Liability Policy.3
Common debit card fees
Depending on where you open a checking account, you might have to pay some fees for your debit card. Common fees include:
- Monthly account fees
- Low balance fees
- Overdraft fees
- Foreign transaction fees
- ATM fees
Want a debit card without hidden fees? Give Chime a shot.
- We don’t charge you monthly maintenance fees, and we’ll never charge you a fee for a low balance. Keep as much or as little money in your account as you’d like.
- When you travel abroad, some banks charge you foreign transaction fees (often 3% of every transaction!). With Chime, you won’t pay a cent for foreign transactions.
- Some major banks still charge you if you overdraft (spend more money than you have in your account). Instead, Chime will either decline the transaction – or spot you up to $200 if you’re enrolled in SpotMe.4 No fees either way!
- Don’t sweat ATM fees. With Chime, you’ll get fee-free access to more than 60,000 ATMs nationwide.2
How to get a debit card
You usually get a debit card when you open a checking account. For example, when you open a Chime checking account, we’ll mail you a debit card. It takes about seven to ten business days to arrive.
You’ll need to provide basic info to open a checking account, including:
- Your name, phone number, and email address
- Your home address
- Your Social Security number
- Your occupation
- Your birthday
Once your account is open and you receive your debit card in the mail, follow the instructions that come with the card to activate it and set up your PIN.
Why wait? When you open a Chime checking account, you don’t have to wait for your debit card to arrive in the mail. You can immediately start making digital purchases with a temporary card in the Chime app.
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 buy something on the weekend, on a bank holiday, or outside normal business hours. Pending transactions usually clear within three to five business days but 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 traditional checking account and get a debit card. However, teenagers can often open a teen checking account that comes with a debit card, but usage may be more limited.
Parents can also purchase their kids prepaid debit cards to use instead of cash, but it’s not a decision to make lightly. Check out our resource for determining when your kids should get debit cards.
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.
What is a debit card in simple words?
A debit card is a digital payment method that pulls money from your checking account. You can swipe your plastic debit card for in-person transactions and use your debit card to shop and pay bills online.
Is it better to use credit or debit?
Deciding whether to use a credit or debit card depends on your situation. Debit cards only allow you to spend what you have in your bank account, so you don’t risk taking on unwanted, high-interest credit card debt.
Credit cards, on the other hand, offer more fraud protection than debit cards. Using a credit card responsibly can also boost your credit score.
If you’re worried about slipping into unwanted credit card debt but want to start building your credit score, consider a secured credit card like the Chime Credit Builder Secured Visa® Credit Card — no annual fee2 or interest and no credit check to apply.
Some credit cards and debit cards offer rewards when you use them. If you have a cash back or travel card, consider the rewards potential when making purchases.
When did debit cards come out?
Debit cards first came out in the 1970s,5 but they operated more like ATM cards. That is, you could only use them to withdraw cash at an ATM.
Can a debit card be used as a credit card?
Sometimes, you can run your debit card as a credit card when paying for purchases. That doesn’t mean you suddenly have a credit card in your wallet – it just means the merchant will process the transaction as credit.
Doing so may add fees for the merchant, and it doesn’t help you build your credit score. But in certain scenarios, it could offer additional fraud protections, like zero liability in the event of fraudulent purchases.6
Is Visa a debit or credit card?
Visa is a global digital payments network with both debit and credit cards. You may have a debit card and credit cards in the Visa network, depending on where you bank.
For instance, the Chime debit card is a Visa, and the Chime Credit Builder Secured Visa® Credit Card is a Visa – it’s in the name!
Will I ever be charged an overdraft fee through Chime?
No. If you do not have sufficient funds in your Chime Checking Account, or have reached your SpotMe limit (if enrolled), then your Chime Visa® Debit Card will be declined. There is no fee for declining transactions or for utilizing SpotMe.
Debit cards: A safe way to spend your money
Debit cards offer a safe and convenient way to access money in your checking account, buy goods and services in person, and even pay your bills online. You’ll typically get a debit card when you open a checking account.
How does a debit card stack up against a credit card? Compare the two in our guide to debit vs. credit cards.