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How does a debit card work and why should you use one?

April 23, 2024

When you’re thinking about the easiest, most popular way to pay for things, what comes to mind? Cash? Credit cards? Numbers don’t lie, and surveys say … The debit card is king! Debit cards are the number one method of payment, according to Forbes,1 accounting for 54% of all virtual and physical purchases. They’re preferred over credit cards, checks and even cash.

How does a debit card work?

A debit card allows you to withdraw or use money from your bank account. Typically, a debit card is connected to a checking account, but debit cards are also available for some money market and Health Savings Accounts (HSAs). When you use your debit card, the money is debited from the account your card is attached to. Unlike credit cards, there is no bill to pay later since the money comes out of your account.

Debit cards can be used in multiple ways, including:

  • Withdrawing money from an ATM
  • Making a purchase with your digital wallet
  • Making a purchase online or in-store
  • Paying a friend with a peer-to-peer payment app
  • Paying bills in person or online
  • Holding a hotel, car or restaurant reservation

What are debit cards good for?

Almost everything! There are three main ways to use your debit card:

  1. Swipe it

  2. Tap it

  3. Click it

Swipe: When you’re making a payment in a store, a debit card functions similarly to a credit card. Swipe the card in the store’s card reader to make your purchase. Unlike a credit card purchase, you’ll be asked to enter your four-digit PIN into the store’s card reader. This keeps your transaction secure since a thief with your card would presumably be unable to enter your PIN at the point of sale.

Tap: Use your contactless debit card to simply tap to make a purchase! Adding your debit card to your digital wallet (aka mobile wallet) allows you to make contactless purchases everywhere they are accepted: in stores, online and in certain apps. Apple Pay, Google Pay and Samsung Pay are just some of the digital wallet services available. When you sign up for one of these, you’ll enter your debit card information. By using a digital wallet, you’re assigned a unique digital card number that’s linked to your payment method and the wallet itself, rather than your actual card number. This means your card number isn’t stored anywhere, making digital wallets more secure than many people realize.

When you’re ready to make a purchase, just tap your phone to any reader that accepts digital wallet payments, and your purchase is complete!

Check out our digital wallet blog to learn how to set up contactless payments.

Click: Debit cards can be used to make online purchases just like a credit card. Simply enter your debit card number where the website asks for a credit card. Then, enter the expiration date and any other requested information (like the CCV number from the back of your card) to complete the online transaction. You can also use your debit cards with PayPal and person-to-person payment apps like Venmo.

Why debit cards are a smart choice

Using a debit card for everyday purchases limits credit card debt and helps keep you on track with your budget by limiting your spending to what you currently have in your account. Your morning latte? Debit it! New sneakers you saved up for? Debit it! Just make sure you record each transaction you make using your debit card (no matter how small!) so that you don’t go over budget.

Safety Tip: Log in to online or mobile banking at least once a week to check your accounts and review the transaction history for accuracy.

Another major benefit of using debit over credit cards is that you won’t be charged interest on your purchases as you would with a credit card. Considering the average revolving credit card debt per household is over $20,000,2 according to NerdWallet’s annual debt analysis, those interest charges could really add up. Plus, you may be less likely to overspend with a debit card.

What happens if I overspend?

If you try to make an ATM withdrawal for more money than you currently have in your account, the machine will notify you that your balance isn’t enough to cover the withdrawal. What if you’re making a purchase? Depending on how the account linked to your debit card is set up to respond to purchases of an amount greater than your available balance, your transaction may be declined or partially paid. Or, the transaction may go through, causing your account to become overdrawn and potentially incur fees. If you'd like to avoid any of these scenarios, ask your credit union to explain how your debit card will work in situations where you have overspent and ask for information on the overdraft services options available to help protect or provide coverage to your account.

The details of debit

Debit cards are secure, easy to use and can help keep your debt level down. They are more convenient than cash, more secure than checks and are accepted virtually anywhere!

So, tap to purchase your groceries. Swipe for your morning coffee. Click to order a couch for delivery, buy pajamas on Amazon, get Chinese takeout from Grubhub, pay your Netflix bill and enjoy a cozy night in. (OK, we might have gone a little overboard with that last example, but it’s legit.) Whatever you need, your debit card is there for you — as long as you have the money in your account to cover it.

Debit card safety and security

At Desert Financial, your Visa® Debit Card is fraud-protected and we act quickly to resolve qualified fraud claims. Your debit card comes with Zero Liability Protection, so you will not be responsible for fraudulent charges made with your debit card.3 To protect your debit card, review your checking account regularly, report fraudulent charges or lost/stolen cards immediately, keep your debit card in your possession at all times, protect your PIN and only use your debit card with trusted vendors. For more information about fraud, scams and identity theft protection, visit

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3Zero Liability Protection covers fraudulent transactions made by others using your Desert Financial debit card. For transactions to be covered under this protection, please do not share personal or account information with anyone. In addition, please report any fraudulent transaction promptly. For complete terms and conditions, refer to Statements of Terms, Conditions and Disclosures.

The material presented here is for educational purposes only and is not intended to be used as financial, investment or legal advice.

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