Debit Cards 101

Debit cards often are confused with credit cards. They even have the Visa or MasterCard symbol on them! So what’s the difference? Lets start with debit cards. Debit cards are connected to your personal bank (checking) account. When you swipe them, the money is  taken from your checking account, so basically you’re paying with money that you already have. It’s almost like paying with cash but easier to carry and you don’t have any loose change to worry about.  On the other hand, when credit cards are swiped, it takes money from the credit card company and you have to pay them back later. At the end of the month, you have a credit card bill to pay, which includes what you bought plus any charges that apply.  In fact, since there are sometimes fees for using the credit card and interest charged on money you don’t pay back right away, you can end up paying more with a credit card than a debit card!

Debit cards make transactions faster and give you the option to get cash back from purchases you make with your checking account without having to go to an ATM. I know if I need cash and can’t find a bank I walk into the nearest store, buy something with my debit card, and get cash back. Luckily, there are safeguards for debit cards to prevent your money from getting stolen. When you purchase something with your debit card, you have to input your personal identification number. Your PIN is a four-digit pass code that only you know, so if you lose your card or somebody else tries to use it, they have to know your PIN for it to work. The PIN makes debit cards a bit safer than cash, which if you lose, can be used by anybody.

Overall a debit card allows you to use your own money to buy stuff, is more convenient than cash and doesn’t have many of the extra charges that many credit cards do.  But what do you think are some beneficial features of credit cards that a debit card can’t offer?

Stay tuned to learn all about this in the second part of Debit Cards 101!