Arvest Education Center

Debit Cards

Even though debit cards have become widely used, many people are unfamiliar with their advantages and disadvantages. Debit cards look like credit cards, but function like cash or personal checks.

Debit cards can function in two ways:

  1. Like an ATM card for immediate withdrawals of cash
  2. Like a check when buying an item. The money used to pay for the transaction is usually deducted from your account within a day or two depending on when the retailer presents the transaction for payment.

Advantages of a Debit Card

  • Easy to obtain. Once you open an account most institutions will issue you a debit card upon request.
  • Convenience. Purchases can be made using a chip-enabled terminal or by swiping the card rather than filling out a paper check.
  • Safety. You don't have to carry cash or a checkbook.
  • Readily accepted. When out of town (or out of the country), debit cards are usually widely accepted (make sure to tell your financial institution you’re leaving your city; to not have an interruption in service).

Disadvantages of a Debit Card

  • No grace period. Unlike a credit card, a debit card uses funds directly from your checking account. A credit card allows you to borrow funds on credit, leaving disposable cash in your account.
  • Check book balancing. Balancing your account may be difficult unless you record every debit card transaction.
  • Less protection. Most financial institutions will try and protect their customer from debit card fraud. However, a customer could potentially be liable for up to $500 on fraudulent debit card transactions compared with only $0 on credit cards. Be sure to check with your financial institution to learn the details.
  • Fees. Using your debit card for ATM transactions may be costly if the ATM is not affiliated with your institution.

Some Guidelines

  • Guard your debit card against loss or theft. Keep it in a safe place just like cash, credit cards or checks.
  • If you lose your debit card, notify your financial institution immediately.
  • Choose a PIN number that only you know. It is recommended, you don't use your phone number or birthday.
  • Guard your PIN number. Memorize it and never write it on anything you keep with you.
  • Keep receipts from all your debit card transactions for your records.
  • Review your statements immediately and investigate any unknown transactions.
  • Use chip-enabled technology if available. For the most secure transaction, if a retailer offers a chip-enabled terminal, use it instead of swiping the magnetic strip.

This content has been provided by Practical Money Skills and is intended to serve as a general guideline.