Debit Cards 

Even though debit cards (or check cards) have become widely used, many people are unfamiliar with them.  They look like credit cards or ATM cards, but function like cash or personal checks.  When you use a debit card for a transaction, the money is quickly taken from the checking or savings account that the debit card is linked to. 

Debit cards can function in two ways – like an ATM card for immediate withdrawals of cash from an account or like a check when buying something.  The money used to pay for the transaction is usually deducted from your account within a day or two, just like a check. 

Advantages of a Debit Card

• Easy to obtain.  Since you are not applying for credit, once you open an account, most institutions will issue a card.
• Convenience.  Unlike a check, when using a debit card for a purchase, personal identification is usually not needed.
• Safety.  You don’t have to carry cash or a checkbook.
• Readily accepted.  When out of town or the country, debit cards are usually more widely accepted than an out of town check.

Disadvantages of a Debit Card

• No grace period.  Unlike a credit card, money for debit card transactions is immediately or quickly deducted from your account.
• Check book balancing.  Balancing your account can be difficult unless you record every debit card transaction.
• Less protection.  Your financial exposure for the unauthorized use of credit cards is relatively low.  The protection against unauthorized use of debit cards can be lower .  Be sure to check with your financial institution to learn the details.
• Fees.  Using your debit card for ATM transactions can be costly if the ATM is not affiliated with your institution.

Some Guidelines

• Guard your debit card against loss or theft.  Keep it in a safe place just like cash, credit cards or checks.
• If you lose your debit card, notify your financial institution immediately.  You will also probably want to close your account and open a new one.
• Choose a PIN number that only you know.  Don’t use your phone number or birthday.
• Guard your PIN number.  Memorize it and never write it on your card.
• Keep receipts from all your debit card transactions.
• Review your statements immediately and investigate any unknown transactions.