A debit card is a payment card that deducts money directly from your checking account1. Also called “check cards” or “bank cards,” debit cards can be used to buy goods or services or to get cash from an ATM1. Debit cards can help you reduce the need to carry cash or physical checks to make purchases.
Debit cards work differently from credit cards. With debit cards, you are using your own money that you already have in your account, not borrowing money from a credit card issuer. You do not go into debt when you use a debit card, and you do not have to make monthly minimum payments or pay interest charges1. However, you also do not build credit history or earn rewards when you use a debit card.
Debit cards usually have daily purchase limits, meaning you can’t spend more than a certain amount in one 24-hour period1. You may also need to enter your PIN (personal identification number) when you use a debit card, although some purchases can be made without one1. Debit cards draw the funds immediately from your account, so your spending is limited to what’s available in your checking account1.
Debit cards may have various fees associated with them, such as:
- ATM transaction fee: If you withdraw cash from an ATM that’s not affiliated with the bank that issued your debit card, you may be charged an ATM transaction fee1.
- Insufficient funds fee: If you use the card to spend more than you have in your account, you can face an insufficient funds charge1.
- Overdraft fee: If you’ve registered for overdraft protection and spend more than your limit, your purchase will go through, but you will incur overdraft fees1.
- Replacement card fee: You might incur a replacement card fee if your debit card is lost, damaged, or stolen and you need to order a new card1.