What is a Debit Card? How They Work, Fees, and More

A debit card is a plastic payment card issued by your bank when you open a checking account. Some banks also offer debit cards with money market accounts, which combine the features of a checking and savings account into one.

Also called bank cards or check cards, debit cards help you stay connected to your money without carrying checks or cash. So what’s a debit card for? You can use your card to spend, pay bills, or withdraw cash at ATMs.²

Since you’re only spending your money you’re not creating debt. If you try to spend more than you have available in your account, the transaction could be declined unless you’ve opted for overdraft protection. This feature allows your bank to cover transactions that would put your balance in the negative, in exchange for a fee.³

Pro tip: 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.⁴

Debit cards are linked to your bank account. 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. Options include Visa^®, Mastercard^®, Discover^®, and American Express^®.

How does a debit card work for different transactions? Here are some helpful tips to know.

• You may need to enter a secure personal identification number (PIN) to complete a debit card transaction in person.
• If you’re using your card to pay online, you may be asked for the CVV security code on the back of the card.
• You can link your debit card to mobile wallet apps like Apple Pay^®, Google Pay™, and Samsung Pay™.
• Debit cards make it easier to pay friends and family through peer-to-peer (P2P) payment apps.
• Fees may apply when using your card at ATMs. Chime debit cards have more than 50,000 fee-free ATMs in network.^*

Banks and fintech companies can charge a variety of fees for the convenience of having a debit card. Here are some of the most common debit card fees to know.

• 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 providers charge you foreign transaction fees. Chime doesn’t charge these fees.
• Some major banks and fintechs charge overdraft fees if you 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.^†

You usually get a debit card when you open a checking account. For example, here’s how to get a debit card when you open a Chime checking account:

You’ll need to provide basic information, 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. It usually takes about seven to ten business days to arrive.

Debit cards and credit cards have some things in common but they aren’t the same. Here are the key differences to know about using a debit card vs. credit card.

• Debit cards allow you to spend money from your bank account with no interest charges.
• Credit cards let you borrow money, and then repay it over time with interest.
• Using a debit card to spend, pay bills, or withdraw cash won’t hurt your credit score but it won’t improve it either.
• Using credit cards can help you build or improve your credit score if you’re practicing responsible money habits.
• Both debit and credit cards can offer rewards for purchases. For example, you might earn 1% back on what you spend.
• Debit cards and credit cards both offer protection against fraud, but credit card protections tend to be greater.⁵

When should you use a debit card vs. credit card?

You might prefer to pay with a debit card if you don’t want to create debt with purchases that you’ll have to pay interest on. On the other hand, a credit card could make sense for larger purchases that you’ll need time to pay off.

It’s helpful to understand what a debit card is and how to use one when opening your first checking account. If you’re a parent, you might be interested in introducing your kids to banking and how money works. A debit card, either a prepaid version or one that’s linked to a bank account, can be an excellent way to do that.