How do debit cards work

Published on 13 July 2012 by Raffick Marday

How do debit cards work

Since their launch in 1987 debit cards have established themselves as the most popular card payment with consumers. Initially developed as a convenient and cost-effective alternative to point-of-sale cheques, debit cards are increasingly being used as a substitute for cash.

They operate like cash or a personal cheque. When you use a debit card the money is immediately deducted directly from your current account. As long as you have enough money in your account you can use your debit card to buy things in person, over the phone, by mail order and over the Internet. While a credit card is a way to "pay later", a debit card is a way to "pay now". In addition, they can be used to get up to £50 cashback from merchants offering that service.

Debit cards are linked directly to your bank account. You can use them to buy goods or withdraw cash and the amount is taken from your account right away.

You can also use a prepay debit card to get 'cashback' from certain shops where you buy goods and also ask them for money back from the cashier. The total amount is deducted from your account right away.

When using a cash machine or paying for goods with a debit card you'll need to enter your PIN (personal identity number). When buying goods you usually enter your pin number into an electronic hand held device, but in some cases you may have to sign.

Most bank accounts offer debit cards. Most debit cards double up as 'cheque guarantee cards', guaranteeing that your cheque will be honoured by your bank up to a stated amount.

What happens if there's not enough money in your account?

This will depend on the type of debit card you have:

  • if you have a Solo or Electron the balance in your account is checked before each transaction – if there's not enough money you won't be able pay or withdraw cash without prior agreement
  • if you have a Switch, Visa or Delta card your account balance won't necessarily be checked and the payment may still go through


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