A debit card is a plastic payment card for buying stuff online and offline, using your funds. It connects your checking bank account to payment processors.
With a debit card, you are not getting into debt when you buy something. That is because you spend your own money instead of credit.
In this debit card guide, you will learn more about using a debit card.
Difference between a Debit Card and ATM
A debit card is different from a simple ATM card, in that, you can use it to do more than withdraw funds from an ATM. It allows you to transact with businesses that are not your bank’s affiliates. However, if your ATM card has a Visa or MasterCard sign, then it can function as a debit card.
Types of Debit Cards
There are two types of debit cards. While they both allow you to spend your money, the way they allow you to access your money differs. The two types of debit cards are:
- Regular Debit Card
- Prepaid Debit Card
Regular Debit Card
A regular debit card connects directly to your bank account, every time you use it to pay for goods and services. That also includes the times you make ATM withdrawals.
As long as there are funds in your bank account, you will be able to pay for stuff online and offline. However, using a regular debit card does not allow you to improve your credit score.
Prepaid Debit Card
A prepaid debit card does not connect directly to your bank account. To use it online or offline, you have to load it with funds first using cash, checks, or online transfers.
It is possible to have funds in your bank account, and still get your prepaid debit card declined. What happens when users forget to load it with funds.
The good news is that that requirement makes a debit card safer than a regular debit card if you lose it.
As with a regular debit card, you do not get credit points for shopping with it.
How to Apply for a Debit Card
Most banks will issue you a free debit card if you do not want to open a checking bank account with them. Prepaid debit card issuers are also a good option. With them, you can apply for a card that is not attached to your bank account.
Some issuers will charge you a card issuer fee, while others will issue the first card free.
Debit Card Fees
You can incur some fees if you use your debit card to buy something or make ATM withdrawals. While some banks or credit unions offer free withdrawals at their ATMs, you still have to pay for using out-of-network ATMs.
The ATM withdrawal charges can be as little as $2 or as much as $5, depending on where the ATM is located in the world.
There are also foreign exchange fees that range from 1% to 3% if you withdraw funds in a currency other than the card’s primary currency.
Other fees that you may incur for having a debit card include card replacement fees, overdraft fees, and monthly maintenance fees. Some prepaid debit card issuers will not charge you maintenance fees if the card is not loaded with funds.
Get a Debit Card
We hope that this article answered pressing questions you had about debit cards, and you are now ready to get one.
We recommend that you get the best debit card that allows you to enjoy spending your money anywhere and at a minimal cost.