What is a debit card

Published on 10 July 2012 by Raffick Marday

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What is a debit card?

A debit card is an electronic payment card that is issued by the bank you are banking with and is usually attached to a current account or basic bank account. The debit card allows you to access money held on your account giving you more flexibility. You can use your debit card to pay for goods or services and withdraw cash from atm machines. Debit cards work by accessing any funds in your account once you make a transaction and it is authorized it immediately transfers money from your account to the recipients account.

Why do banks issue debit cards?

All banks want you to have a debit card as this reduces the chance of you going in to the banking branch keeping waiting time to a minimum.

Debit cards are also here to replace people using cheques as nearly all businesses online and at retail outlets accept debit cards and credit cards. This removes the need for bank clients to go to the bank to remove cash from their account as they can now just go to an ATM or pay electronically at merchant locations.

What are the main features of debit cards?

Most debit cards have two features: the ability to purchase items online or at retail outlets and the ability to withdraw cash from your bank account at an ATM.

Debit cards are available in most countries around the world, and are slowly replacing the use of checks in the United States.

What are the drawbacks or debit cards?

Debit cards do possess some drawbacks for you the biggest drawback is the possibility of identity theft which is increasing every year. The other draw back is bank fees you need to shop around to see what fees are attached to a debit card. Finding fees charged can be hard to find on most banking website but as a guideline most banks charge you when you use your card abroad and even more if you purchase goods abroad in a foreign currency.

How do banks combat fraud?

All debit cards have a personal identification number (PIN) as a standard security feature. When making a purchase with your debit card or withdrawing cash from an ATM you will have to enter a PIN for verification. The PIN number comes in the post separately and should be destroyed once you remember it.

The other security feature is the three-digit security code listed on the back of the debit card, which is used making purchases online, or over the phone.

Some counties use additional safety measures such as a photograph of the card's owner on the front, or an electronically reproduction of the customers signature imprinted on the card.

Debit Card theft online is a problem

While the security features hold up well when doing transactions at a retail outlet or at an ATM they leave debit card users vulnerable for online theft. If criminals get hold of your debit card they will likely have all of the information they need to use your debit card for Internet transactions. If you discover your debit card is missing, or notice suspicious charges to your account, contact your bank immediately to put a stop on it.

Banks tend to set a limit of daily on how much you can withdraw from your debit card this also includes transactions. Banks monitor all debit card transactions to spot suspicious spending behavior, which is a safe guard to criminals getting hold of your card. Some banks also require for you to inform them when you are planning to go on holiday, this is to ensure that they do not put a block on your debit card when you are away.

Rules regarding the use of debit cards vary from country to country and can impact their popularity. Debit cards are slowly taking over the need for cash, where most retail outlets selling high priced merchandise may not accept cash and if they do may require proof of identification to ensure money-laundering regulations are not being broken.


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