What is a Debit Card?

They may look like a credit card, but a debit card pulls money from your account directly whereas a credit card pulls from an open line of credit. Learn more about how a debit card differs from a credit card.

What is it?

Every purchase made with a debit card is taken out of your checking account almost immediately. This is why your debit card is linked to your everyday transaction account, like a checking account. These purchases are paid for using the funds available and without paying any interest.

A debit card also:

  • Gives the ability to swipe, tap, or insert to pay for goods with a merchant
  • Uses a PIN – A PIN is a personal identification number that authenticates the user making the purchase. Signature transaction are also available, but do not offer cash back options at a point-of-sale system
  • Won’t go through unless funds are available in the linked checking account – Or it will go through and result in an overdraft fee from your financial institution

Available funds vs. account balance

Available funds are what you have left in your account after taking out any checks that haven’t cleared, pending transactions, etc. Pending transactions occur if you owe money to a merchant and it has been processed but not fully cleared yet.

The account balance does not take into these scenarios. The account balance is how much money you have currently, not considering pending “soft” transactions.

To get an accurate reading on how much money you have in your checking account before using your debit card, look at your available funds.

How to get a debit card

Most financial institutions offer debit cards since it is an easy and convenient way to access funds in your checking account. When you consider getting a debit card, make sure you look at the details of the card. Some debit cards aren’t widely accepted. The best card providers are big names like Visa and Mastercard.

Also, some financial institutions require you to keep a minimum account balance at all times or incur fees. Or, there are automatic monthly fees to maintain the account. When choosing a financial institution to get a debit card, pick one with the least amount of strings attached.

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