How to Use a Debit Card

Debit cards link to bank accounts. The difference with using a debit card, though, is that the money you spend with a debit card is yours. You aren't borrowing money for the charges you make. Learn all about debit cards to know if they are a good fit for you.

What Is a Debit Card?

Linked to a checking account, charges you make with your debit card will come directly from your account balance. You can use a debit card in most places that accept credit cards. You can also use it in ATMs to get cash out of your checking account.

Merchants often place holds on money in an account to reserve the money until transactions complete. Sometimes these holds are larger than the amount charged, which is a way for merchants to be protected if additional costs arise. For this reason, it's wise to have a buffer in your account to cover higher holds.

Benefits of a Debit Card

Having a debit card can be a good thing for a couple of reasons. They are convenient, eliminating the need to write checks or carry cash. They are accepted almost anywhere, which makes it easy to shop and travel. All you need to do to get a debit card is open a checking account and deposit money into the account. Most banks have debit cards available for account holders.

Disadvantages of Using a Debit Card

You may also run into a few disadvantages of using a debit card. Using your debit card will deduct money from your checking account directly and immediately. You won't have a grace period like you would with a credit card. Debit cards offer less security and protection for fraud. For example, if someone compromises your account and makes unauthorized charges, you could be responsible for up to $500; every bank has unique policies about unauthorized charges though. You may also have to pay ATM fees if you use your debit card to get cash from an ATM.

How to Conduct Debit Card Business Transactions

If you're a business owner, you might opt to use a debit card for business transactions. Prepaid debit cards can be an ideal way to provide employees with a way to make purchases for your business. This effectively protects a balance you might keep in your business checking account while giving employees the ability to make necessary purchases. You can load the card as necessary, ensuring that you maintain a business budget.

How to Use a Debit Card

Use a debit card at a brick and mortar place of business by scanning it or inserting it into a card reader. You will be required to confirm the amount to be charged, and you can also add extra money to the charge amount if you'd like to get cash back. Enter your PIN into the card reader, and wait to remove your card until you see a message instructing you to do so.

You can also use a debit card for online purchases, although this is not as safe as using a credit card. Enter your debit card number, the expiration date and the CVV from the back of the card to process a transaction.