Do you have a debit card? Do you know the difference between a debit
card and a credit card? Many consumers today are using a debit card. You
obtain a debit card from your bank or financial institution. The word
debit means subtract. So when you use a debit card for a purchase or bank
withdrawal, the amount is subtracted from your bank account.
You can get a credit card from a bank, too. Using credit cards is like
loan. You use the credit knowing you have to repay the amount, plus interest,
if you do not pay the full amount each month.
Automatic Teller Machine (ATM) cards are a form of debit card. ATM cards
can be used at a bank machine to take out money or deposit money from
checking or savings account or to handle other bank tasks. You must enter
personal identification number (PIN ) before the ATM will let you make
transaction. You must subtract or add all ATM transactions to your check
savings account book right away.
There are two other types of debit cards. “On-Line”
Debit Cards are called ATM cards with a purchase feature. You
can purchase things with an on-line debit card. Your purchase is subtracted
right away from your checking account. When you are at a store terminal,
you must punch in your PIN
number, as you would at an ATM.
“Off-Line” Debit Cards look like credit
card, but the merchant’s terminal reads your card and identifies
it as a debit card rather than a credit card. When no PIN number is used,
you may have to sign the receipt as you would for a credit card purchase.
Your purchases are subtracted from your bank account within 2 to 3 days.
Here are some tips for using your debit card responsibly:
- Memorize your PIN number.
- Do not use a PIN number a thief could figure out such as your birth
date or phone number.
- Never give your PIN number to anyone.
- Record all debit charges in your checkbook.
- Record all ATM deposits or withdrawals in your checkbook.
- Keep your debit receipts in one place so you find them easily when
you reconcile your bank statement monthly.
- Contact your bank right away if your card is misused, lost, or stolen.
- Check with your bank about your liability if your debit card is lost
or stolen. Government rules require debit card issuers to set a maximum
liability of $50 if reported within two days. Your liability increases
to $500 if you report the loss within 60 days.
- You can dispute purchases you did not make or other mistakes within
- All debit card purchases you return or cancel are treated as if they
were purchased with a cash or check.
- You have less protection than with a credit card purchase for such
like never delivered or broken items.
Prepared by: Katherine Reuter, Extension Educator Consumer
and Family Economics, University of Illinois Extension. Countryside Extension
Source: National Consumers League web site:
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