What is a debit card?

A debit card allows you to make payments and withdraw cash from your available account funds. It looks like a credit card but works like an electronic cheque, because the payment is deducted directly from a bank account.

If you use a debit card at a retail store, you or the cashier puts it in (or swipes it through) a terminal that enables your financial institution to verify electronically that the funds are available and approve the transaction. Most debit cards can also be used to withdraw cash at ATMs (automated teller machines, also known as cash machines).

What's the difference between debit cards and credit cards?

When you buy goods or get cash with a debit card, the money is deducted from your bank account straight away. With credit cards you receive a monthly bill. If you do not repay the amount owed in full on your credit card, or you take out cash, you may have to pay charges.

Why do people use debit cards?

For many people, it is more convenient to carry a small, plastic card instead of large amounts of cash. It is a fast, secure way to pay for purchases without having to pay interest, as you would if using a credit card with an outstanding balance. In some countries, you can also use your debit card to get cash back when you make purchases at a store.

How do debit cards work?

Debit cards are linked to your bank account. You can use them to buy goods or withdraw cash and the amount is taken out straight away. In some countries, when you buy goods you can also ask for money back from the cashier and the amount is deducted from your account straight away, saving you the trouble of going to the bank or an ATM.

What's the PIN number?

Your PIN is the personal identification number on your card. When using a cash machine or paying for goods with a debit card, you’ll probably need to enter your PIN. In the last few years, many banks have introduced what are known as ‘chip and pin’ cards in order to improve security. Under this system you are required to enter your code into an electronic device when making a purchase. In some countries and in some shops, you may still have to sign a receipt.

What kinds of costs are associated with debit cards?

There may be fees for using your debit card, for example if you overdraw your account using your debit card, just as you would if you wrote a cheque that was returned.

Or there could be a charge if you use your debit card at an ATM machine that is not operated by your financial institution.

As with other bank products, your financial institution must clearly explain the possible fees associated with a debit card. Be sure to read any communications to avoid an unexpected fee.

What more do I need to know to help prevent debit card fraud?

Protect your debit card as well as the account number, expiration date and PIN. Never write your PIN on or near your card - memorise it instead.

Don't give out bank account information over the phone or the internet unless you have initiated the contact or you know the person is who he or she claims to be. For example, beware of deceptive calls or emails from anyone claiming to be from your bank and asking you to verify or give out your account information. (A true representative of your bank will never ask for your PIN.)

When entering your PIN at a checkout or ATM, try to stand so that no one can see the keypad. In general, be alert for suspicious-looking devices that may be used to steal information from your card, and if you think an ATM has been tampered with, don’t use it.

Check your bank statements as soon as they arrive and promptly report any discrepancy, such as a missing payment or an unauthorised transaction, to your bank.