debit card

Banking Terms -> debit card

• A debit card is a type of plastic card which gives cardholders access to their bank accounts at a bank or another financial institution. The card is an alternative to paying with cash when buying various products and services. In some cases, there is no actual card, meaning that the debit card is intended for shopping over the Internet. Debit cards have become a popular payment method all over the world, with card holders using them instead of cash, checks, and other transaction methods. It is convenient to use a debit card rather than go to the bank to withdraw cash from one’s account. Cardholders can pay electronically or use an ATM machine to access their savings. There are two main benefits of using a debit card – security and convenience. One can access savings anytime and with ease, unlike writing checks and paying additional fees. Debit cards are considered more secure than cash, as cardholders access their accounts via a special code. Moreover, a check can be stolen. At the same time, debit cards are associated with identity theft and cardholders may have to pay bank fees. Additional safety features of debit cards include customer signature and cardholder’s photograph on the front of the card. Despite that debit cards are a secure payment method when it comes to in-person transactions, holders are vulnerable to theft online. If a con steals one’s purse or wallet, they are likely to get their hands on all the information needed to access one’s bank account. In this case, they can use the debit card to make purchases online. Dual credit/ debit cards are also problematic because they can be used in places where no PIN is required. Suspicious charges and missing cards should be immediately reported to the issuing bank.
  
  Debit cards differ from credit cards in that they allow payments based on funds available in the bank account. They can be withdrawn immediately and are not to be paid back at a later time. Lines of credit, on the other hand, should be repaid.
  
  At present, debit card transactions take place in three ways – as signature debit or offline debit, as PIN or online debit, and though the Purse Card System. With an online debit card, cardholders need an electronic authorization for every single transaction. The offline debit card carries a logo of MasterCard, Visa, or another major credit card. It is used to make payments at a point of sale similar to charging items to a credit card. In addition, there are various kinds of debit cards, the main ones being MasterCard and Visa. The Purse Card system is based on smart cards, with card chips storing value rather than being externally recorded. In this way, network connectivity is not required so that machines accept the debit card.
  
  Another type of card is the reloadable or prepaid debit card, which comes with certain benefits. One is that users should not be clients of a bank or credit union to make purchases or carry out other financial transactions. Similar to other debit cards, they are a safer payment method than checks and cash. Any person aged 18 or over can use a reloadable debit card. Government benefits and pay checks can be deposited free-of-charge and directly onto the debit card.
  
  Finally, there are different ways and places to obtain a debit card. While your local bank may be the safest location to do that, you can also receive a debit card from a convenience store, grocery store, gas station, and other places. These locations sell prepaid cards to their clients.

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