Debit Cards

Debit cards are not credit cards per se. Instead, they are cards that look like credit cards and are used like credit cards, but actually withdraw funds from your checking account with each use.

Pre-paid credit cards are another form of debit card, since the funds are deposited ahead of time and drawn down with each use. Merchant gift cards are also classified as pre-paid debit cards.

Checking account debit cards are generally available at no charge from the bank that holds your checking account.

To prevent use if the card is lost or stolen, consumers using debit cards must enter a PIN with each use of the card. However, in many cases, a debit card can be used like a credit card and a signature rather than a PIN number is required.

Some debit card issuers, such as Pay Pal, offer consumers the option of using the debit card as a credit card and receiving a 1% rebate for each purchase. This is similar to the rewards offered by credit cards and comes out of the fees charged to retailers every time a consumer uses his or her credit card.

Some debit card issuers allow their checking account holders to use their debit cards as a form of “instant credit” should their purchase exceed the checking account balance.

Many consumers prefer the debit card over check-writing or using cash. Their contention is that it speeds up check-out time and gives them a better record of their own purchasing habits. And, since there are some protections if a card is lost or stolen, debit cards are safer than carrying large sums of cash.