Debit Cards

Debit cards, a relatively new financial innovation, are probably one of the best new tools to come from banking in the past 50 years. They truly are the best thing since sliced bread.

A debit card is not a credit card, instead, debit cards are used to spend money you have, not money that you are borrowing. Each time you swipe a debit card, you’re essentially writing a check, as the amount you spend is debited immediately from your checking account. Recently, debit cards have taken over credit cards as the most used plastic card, and they’re unlikely to ever yield the number one spot to credit cards ever again.

Debit cards have some advantages over checks:
Ease of use – Using a debit card is as easy as swiping it through a credit and debit card terminal available at any retail point of sale cash register. Swiping a card is more secure than writing a check because on the bottom of each check is your checking account number. Your checking account number is not listed on your debit card, nor can anyone see it.

ATM functionality – Unlike checks, you can use a debit card as an ATM card to remove cash from your checking account at any ATM. To do the same with a check would require that you write yourself a check and take it to the bank for cashing. That wouldn’t really make all that much sense, since you can just withdraw cash at the bank, anyway.

Security – Besides the checking account number advantage, debit cards are secure in that losing a debit card means that you can call the bank and have them shut off the debit card at any time. Losing a checkbook is a sure way to lose a lot more than just a few dollars worth of checks, as someone else now knows your checking account number, which can be used to purchase things anonymously online. A debit card number is not directly linked to your checking account number, so you need only replace your debit card, not your whole checking account, should it be lost or stolen.

In some ways, a debit card is also like a credit card:
Security – When an unauthorized purchase is made with a credit card or debit card, the bank holds the customer liable only for a certain amount per transaction, often $50. In most cases, the customer is not liable at all, and the bank pays for the entirety of the loss. Banks have a reason not to charge debit card customers for unauthorized purchases, as identity theft is not at all good publicity for any bank.

Swiping – Debit cards can be swiped as credit cards at point of sale terminals, which is a great way to accumulate rewards for rewards debit cards.

How to Get a Debit Card
To get a debit card, you’ll need to open a checking account at a bank or credit union. After you have opened a checking account, a debit card will be assigned to you. Debit cards are a free service that comes “packaged” with checking accounts.

In general, opening a checking account requires that you are good with your money. Checks can be written for amounts over and beyond the amount you have available in your checking account, so it is possible to spend past the amount of cash you have on hand. This is why you should always consider your ability to manage your funds before applying for a debit card. Many banks will reject applications for checking accounts from people who have a bad credit score, since they are very likely to write checks that cannot be cashed on the account. Overdrafts, as they are known, often cost the bank and the customer $10-30 per overdraft.

If you have good credit or no credit, the only other requirement is that you are an adult, or 18 years of age. Minors can open a checking account if they have a parent or guardian sign with them to open the account. In some states, you may need to be 16 years old with a parent or guardians signature, while in most states, a parent’s signature is enough reason to open an account, regardless of the minor’s age.