Debit card (bank card, check card) is a plastic payment card that can be used instead of cash when making purchases.
There are different kinds of debit cards:
- without embossed information – often it can be prepaid cards, but in some countries, there are different debit cards with no name on them,
- with magnetic stripe – it can’t be used in some shops (e.g., shops that accept only cards with chip),
- with chip.
Any debit card directly linked to your bank account (checking account, current account, savings account, etc.). When you pay for something with a debit card, the money for that transaction comes directly out of your bank account, but you’re spared the hassle of writing a check or worrying about whether you have enough cash in your wallet. Sure, you can’t pay for your purchase if you have no enough money on it (see also credit card).
When you use your debit card, the merchant will place a hold on your account for the amount of money in your transaction. Your bank may show you the spending transactions on your account. These are the holds put in by the merchants. The merchants then complete the transaction by submitting their transactions and then the money is taken from your account and shows up in your cleared transactions. Some merchants may take longer to file the transactions, and you may have a transaction listed as pending for a few days. Rarely it can take 25-30 days.
There are different types of debit cards with different conditions of using (and with different fees!). Some of them are useful for retail purchases - they can bring you additional income or cash back. Some of debit cards can be more useful for Internet purchases or can bring you additional bonuses when you buy flight or train ticket, etc.
In some countries debit cards can have:
- an overdraft limit,
- some limits for Internet transactions (the number of transactions or the total amount of all transactions) per day, per month,
- some interest rates – can bring you an additional money.
- Debit card transactions are not always free. Here are some costs to watch out for:
- Out-of-network ATM fee – if you withdraw money from ATM that isn’t in your bank’s network.
- Foreign transaction and ATM fees – if you make a purchase or pay for something or withdraw money in another country.
- Debit card replacement fee – if you lost your card and it is necessary to put your lost card in the stop list (to avoid thefts).
- In some countries, in some shops, not all kinds of debit cards can be allowed. For example, some shops don’t accept American Express cards, only Visa or only MasterCard cards.