A Debit Card combines the utility of an ATM card and some of the functions of a credit card. Also called a check card, the card will often bear the logo of Visa or MasterCard, and those companies process the transactions that take place outside of an ATM machine, like retail stores, restaurants, or phone and internet purchases. Though a debit card looks like a credit card there is no credit involved.

The debit card is issued by your bank or other financial institution in conjunction with an account, and the amount you can spend on it is directly linked to the available balance in that account. Increasingly your transactions are debited in something close to real time from your bank account.

When using the debit card in a store the customer may swipe or insert their card into a terminal, or they may hand it to the merchant who will do so. The transaction is authorized and processed like a credit card is, and the customer verifies the transaction either by entering a personal identification number ( PIN ) or, occasionally, by signing a sales receipt.

When you present a debit card for use in a retail store the merchant will often as “debit or credit?” Your answer determines whether the store will process your transaction using a interbank account or a merchant account. A merchant account is one of the credit card companies like Visa or MasterCard. An interbank network is typically used for ATM processes. The interbank network is essentially a computer network that connects the transaction of various ATMs and therefore allowing access or account use even if the ATM is not owned by the financial institution that has issued the card of the consumer using that ATM.

If you choose the credit or merchant account option you will normally have to sign a receipt as you do with a credit card purchase, and there is probably a higher cost to the retail operation to process the transaction in this way.

If you choose to use the debit or interbank network method, you will probably be asked to put in your PIN number. Either method should have the same result for you.

Although debit cards are made to be used seamlessly in place of a credit card, they are not acceptable for some kinds of purchases, particularly if they are large purchases, or anticipated purchases. Even if you have $8000 in the associated account, the bank may only process purchases up to a smaller amount. Check the terms of your own account before trying to buy an expensive item. Debit cards are also sometimes rejected when they are used for purposes of establishing future payment. For example, a hotel stay in an upcoming week may ask for a credit card in order to establish the ability to pay. A debit card may not be accepted. Car rentals are often exclusively made on credit cards.

The use of debit cards has advantages and disadvantages.

Individuals who have poor personal credit and do not qualify for a credit card can enjoy many of the advantages of a credit card when using a debit card.
For individuals who have had problems with running up large credit card debts, a debit card is a more responsible way to enjoy the ease of plastic transactions.

Use of a debit card concludes any transaction on the spot. There is no credit card bill to pay later, and no check writing, a process that takes several days to complete.

Debit cards are actually better than debit cards for getting cash because you are accessing your own money, not borrowing money. A debit card transaction for cash at an ATM is quick and easy and inexpensive.

On the other hand, if you do not keep careful records of your check writing and debit card transactions, overdrafts can occur which bring along with them expensive bank fees.

Learn to always use credit and debit cards responsibly, and they both serve useful purposes.

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