The Best Little Money Book
Tip of the Month
A debit card (sometimes called a bank card) does not have many of the same protections that a credit card has. When you use a debit card you are allowing the transfer of the money from your bank account to be electronically moved to another bank account. Debit cards can be used when you are paying for a service or making a purchase and at an ATM.
Your debit card works like writing a check on your bank account. Your money is on deposit and you are spending your own money and actually paying with cash. Deductions come directly from your checking account -- or savings or money market accounts, if your card is linked to these accounts -- when you make a transaction.
There are different types of debit cards. Some need a PIN to complete the transaction and other debit cards require a signature. When a signature is needed, the money does not come out of your account immediately. Like a check, it can take two to three days for the transaction to be completed. If you plan to use your debit card at an ATM you will need a card that requires a PIN. Some debit cards let you use either a signature or a PIN and some require both a PIN and a signature. This last type may be the most secure but a debit card is not as secure as a credit card and does not have federal protections.
Transactions show up on your account statements. Keep a record of all your debit transactions so you do not overdraw your account and to be sure to review your statement. Check your available balance regularly. And be aware of potential fees for using a debit card:
According to FICO Card Alert Services, there was a 70 percent increase in debit card fraud between 2015 and 2016. If you are a victim of debit card fraud, you need to report it immediately to your bank or you could be responsible for transactions that you did not make.
What to do: