Debit Cards

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 getting a 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 your checking or savings account or to handle other bank tasks. You must enter a personal identification number (PIN ) before the ATM will let you make a transaction. You must subtract or add all ATM transactions to your check or 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 60 days.

  • 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 things like never delivered or broken items.

Prepared by: Katherine Reuter, Extension Educator Consumer and Family Economics, University of Illinois Extension. Countryside Extension Center.

Source: National Consumers League web site:

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