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How Does a Debit Card Work and Why Should You Use One?

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 the Federal Reserve,1 accounting for 28% of all 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 immediately.

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. Different from 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: 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, which is then stored in your mobile wallet for future use. Then, just tap your phone to any reader that accepts digital wallet payments and your purchase is complete! Check out our video tutorial on 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 Zelle® and 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 since you can only spend money you currently have in your account. Your morning latte? Debit it! New sneakers you saved up for? Debit it! Just make sure that you record each transaction you make using your debit card (no matter how small!), so that you don’t go over budget.

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Safety Tip: Log in to online or mobile banking at least once a week to check your accounts and review the transactions 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 $6,000,2 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.

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Pro Tip: Ask yourself these five important money questions before making any purchase.

Infographic: Time to upgrade my video game console! Debit card = $350 for a video game system? I only have $400 in my account, so I'd better not. VS. Credit Card = $350 for a video game system? Heck, yeah! I can used my credit card and pay if off later.

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 the features of your debit card, your transaction may be declined. Or, the transaction will go through, but you will overdraw, or “bounce,” your account and potentially incur fees. If you want to avoid these scenarios, ask your credit union about overdraft protection options that provide coverage if you overdraw 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 or 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 & Security

At Desert Financial, your Visa® Debit Card is fraud-protected and we act quickly to resolve qualified fraud claims. 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, scam and identity theft protection, visit DesertFinancial.com/Security.

Our Top 8 Debit Do’s and Don’ts

We want to make sure you’re using your debit card to your advantage and with minimal risk!



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