A debit card is a plastic card issued by banks to customers. It allows instant purchase, removing the correct balance from the user’s attached bank account. These cards are distinct from credit cards in that they allow purchase based on available funds in the account to be deducted immediately, instead of by using a line of credit that can be repaid at a later time.
Most debit cards have two features: the ability to purchase items at stores that have automated debit or credit card machines, and the ability to withdraw cash from a bank account at an automatic transaction machine (ATM). They are available in most countries of the world, and have nearly supplanted the use of checks in the United States. The cards possess many dangers to the user, however, both in terms of possible identity theft and unexpected bank fees.
In most cases, this type of card has a personal identification number (PIN) as a security feature. When removing money from an ATM or using an automatic purchasing machine at a store, the user will have to enter his PIN for verification. In online purchases, the PIN is usually not required, but users will often need to enter the three or four digit security code listed on the back of the card. Additional safety measures common for debit cards include a photograph of the card’s owner on the front, or an electronically reproduced customer signature imprinted on the card.
While the security features hold up well for in-person transactions, they leave users vulnerable for online theft. If a thief steals a person's wallet, he will likely have all of the information he needs to use the victim's debit card for Internet transactions. When it's a dual debit/credit card, the thief may also be able to use the card in stores that do not require a PIN for credit use. People who discover their card is missing, or who notice suspicious charges to the account, should contact their bank immediately.
Another peril debit card users face is accidental charges. People who have a two or more linked bank accounts, such as checking and savings, may sign up to have money transferred from one to the other in case of overdrawing the account. Customers should read the fine print carefully, however, as some banks charge an overdraft fee for each transfer of this kind. Banks may also set a limit of daily, weekly, or monthly transactions that a person can use debit for. Exceeding this limit can also result in serious charges to the account.
Rules regarding the use of debit cards vary from country to country and can impact their popularity. In India, the merchant can be charged for each transaction involving a debit purchase, leading to many shops banning their use. A few countries or banking networks charge customers a transaction fee each time they use their card. In most nations, however, the cards are freely and widely used for all types of transactions. Studies suggest that in Canada, New Zealand and the United States, debit has or will soon overtake cash as the most common form of payment.