Debit Card Meaning

Modern-day banking has reached new heights and debit cards have a huge role to play in this progress. But what is the meaning of debit card? 

In this article, we offer a simple explanation to help you understand debit card meaning. 

What is a Debit Card?

A debit card is a plastic payment card you link to your savings, current, or checking account to access funds through an ATM or in person. 

When you use your debit card to make purchases, the funds are directly transferred from your linked bank accounts into the payee/merchant’s bank account. To protect financial information, the debit card is securely embedded with a chip on the front. 

Uses of Debit Cards

• VISA, MasterCard, and other major credit card companies offer debit cards in partnership with banks. You will be able to use your debit card anywhere these branded cards are accepted.

• You can use a debit card to pay for purchases in physical stores. To complete these transactions, you must enter your Personal Identification Number (PIN) or security code.

• You can also pay bills and shop online with your Debit Card. 

• Enter the required debit card information such as your name, card number, expiration date, and CVV (Card Verification Value).

• These transactions are authenticated by entering the One Time Password (OTP) that the bank sends to your registered mobile number and/or email address.

What are the Advantages and Disadvantages of Debit Cards?

Despite their popularity, debit cards come with both pros and cons. Let us take a look at these.

Pros of Debit Cards

Here are some of the advantages of owning and using a debit card:

• Debit cards keep you from overspending. Since there is a limit on the amount you can spend, it is unlikely for you to go beyond that limit.

• In need of cash? You can simply use your debit card to withdraw some cash from the ATM.

• Debit cards need an authentication PIN to approve the transaction, making them secure against fraud.

• They do not carry an annual fee.

• To avail a debit card, all you need is a valid and functioning bank account. There is no credit check or minimum credit score requirement.

• Moreover, a debit card does not incur any interest charges and is very convenient to use.

Cons of Debit Card

Here are some drawbacks that account holders should be aware of:

• Unlike credit cards, you can’t use debit cards to purchase a product and pay later.

• While it is good for money management, debit cards do not help you build credit scores.

• Banks insist on maintaining a specific minimum balance in the account. If you overspend it with a debit card, you could be charged overdraft fees.

• Since there is a limit on how much you can spend, making large purchases can be a hassle.

• Every debit card has a unique PIN. Forgetting it can render your debit card useless and the recovery generally takes days.

Debit Cards, ATM Cards, and Credit Cards: What's the Difference?

A Debit Card is used to make online payments and withdraw cash from ATMs. Banks typically provide a variety of Debit Cards, such as MasterCard, Visa, and RuPay. 

ATM card use is limited to ATM transactions. To complete a transaction, both a debit card and an ATM require a PIN.

Credit Cards, on the other hand, enable ATM withdrawals, but they are essentially a type of loan. Furthermore, it allows you to purchase any product on credit and pay the balance later and can also help increase your credit score.

Conclusion

Debit cards have become the preferred mode of payment for the contemporary shopper and this is largely due to the convenience they provide.

So what do you mean by debit card? Simply put, debit cards are bank accounts that you can conveniently carry in your wallet!

They are issued by banks or credit unions. These cards are linked to your bank account, whether savings, current, or otherwise. You can use these cards to make financial transactions anywhere in the world, where debit cards are accepted.