Educational Consumer Tips

Debit Cards Still Confusing to Many Consumers

Author: Better Business Bureau

In spite of the growing number of consumers using debit cards, many still don't know much about them. With a debit card, also known as check card, the amount you spend is limited by what you have in your bank account. Debit cards look like credit cards or ATM (automated teller machine) cards, but operate like cash or a personal check. When you use a debit card, your money is quickly deducted from your checking or savings account.

There are two types of debit transactions, both often housed on the very same card that your bank sends you as a replacement for your old ATM card. The first are online transactions you perform at an ATM. Just put in a personal identification code (PIN) and funds are electronically transferred from your account as you designate. The second are offline transactions: present your card in a store and it is treated like a credit card sale. The money used to pay for the transaction is then deducted from your checking account, usually within a day or two.

According to a survey generated by the National Consumers League, many consumers don't understand their liability limits, and are confused about protections offered by banks and debit card providers. The Better Business Bureau suggests before you use your debit card, call your bank or issuing institution and ask the following:

What are my liability limits if my card is stolen or lost?
Am I charged any fees for using my debit card?
Is there a cap on how much money I can debit per day? Per month? What are the limits?
Do I have the same purchase protections with my debit card that I have with a credit card?
Can I get my photograph on my card?
If my card is lost or stolen and money is taken out of my account, how soon will it be replenished by the bank?