Many of the same conveniences as credit cards can be found on a debit card, as opposed to carrying around a lot of cash or writing paper checks.The differences between credit and debit cards affect how you use them.If you already have a debit card from your bank, you should use it if you want to, but you need to think about how it works and your personal financial security.
Step 1: You should know the basics.
Debit cards are similar to credit cards in that they can be used the same way, but they give different funds in different ways.They are not interchangeable options when you reach into your wallet.If you want to avoid paying interest on outstanding balances, every time you use a credit card, you are borrowing money that you need to pay back in full when your statement period ends.You can draw money from your bank account when you use a debit card, because it's linked to your account.Unlike credit cards, you cannot spend money you don't have in your account.You can use both a credit card and a debit card at the same time.It's up to you to decide.
Step 2: The card that suits you best is what you should look for.
Banks and credit unions want their customers to have a debit card so they can make more money.It is always a good idea to shop around and read the fine print when it comes to the perks, protections, and costs associated with debit cards.Annual fees and transaction fees are some of the fees that could be associated with your card.If you shop around, you can find a card with substantially lower fees.For reasons discussed later in this article, some banks offer airline miles and cash-back bonuses for debit purchases.You can find the rewards program that suits you best.
Step 3: Keep an eye on your funds.
When your statement comes due, you can spend up to your credit limit and worry about how to pay.If you want to avoid having your transaction declined or incurring hefty overdraft charges, you need to know how much money you have in your linked account at all times.If you need to add funds to your account to cover pending charges, you will have little time after the fact to do so.If you don't have enough funds, your card will be declined.Many banks tout the convenience of overdraft protection coverage with your card, which you may have to sign up for if you don't want it.If you have overdraft protection, you can make purchases with insufficient funds to cover them and avoid the embarrassment of a declined card.This costs a lot of money per transaction.If you have insufficient funds and your bank charges a $25 overdraft charge per transaction, your morning routine of buying a coffee, a newspaper, and some chewing gum could cost you an extra $75.Look into the fine print before agreeing to a program.You can always keep a close eye on your balance and not spend what you don't have.
Step 4: It's a good idea to consider when not to use your card.
You can use a credit card and a debit card at the same time.That doesn't mean you should use them the same way.Potential liability and fraud are the main concerns.The maximum liability for fraudulent credit card transactions in the U.S. is $50, with no time limit for starting a claim.You have to claim fraudulent transactions within 48 hours to have the $50 limit.Between two and sixty days, your liability limit goes to $500, and after that time you are on the hook for all fraudulent transactions.If you shop around, you can find better fraud protection on banks' debit cards.Dealing with debit card fraud is more of a hassle than you might think.It can take a long time to get your account balance back after someone stole your card or information.If you are confident in the site's security level, you may want to use a credit card instead of a debit card.Criminals can install skimmers that steal your card information when you use an outdoor ATM or gas station kiosk.Don't use equipment that looks damaged or ill-fitting.Paying at a restaurant is where your card leaves your sight.There are situations where a pre-payment deposit is required.A hold charge may be placed on your account to cover potential overages, such as pay-per-view movies, room service, damages, etc.It may not be removed for several days.Your own money is not accessible to you and may throw off your funds awareness.
Step 5: You should remember your PIN number.
All debit cards have a four-digit PIN number as a security measure.You need to create a PIN number that is easy for you to remember but hard for a criminal to figure out, just like with your passwords.It's never a good idea to use the four-digit birth year.You need to enter your PIN number in order to use the ATM.When entering your card and code, keep an eye out for evidence of skimmers, such as damage to the machine.Signing your name or using your PIN number can be used to make purchases with your debit card.There are two steps to consider the pros and cons of each option.
Step 6: You can enter your PIN when you wipe your card.
If you use your debit card at the supermarket checkout, the card reader will ask you if you want to pay with a credit ordebit card.You will have to enter your PIN number to complete the transaction if you selectdebit.The funds in your linked bank account can be used to make debit card transactions.By the end of the day, PIN transactions tend to go through faster.Banks may charge you fees for "swipe-and-PIN" transactions or offer you rewards only if you sign up for them.You should read your account's fine print.If you're concerned about saving money, it's a good idea to enter your PIN.It is up for debate if PIN transactions are more secure.
Step 7: You can either sign your name or wipe your card.
If you choose to use your debit card as if it were a credit card at the supermarket checkout, you will need to sign to complete the transaction instead of entering your PIN number.Remember, however, that these transactions are not credit transactions at all.You have to use a credit card to pay with credit.Banks earn more per transaction in interchange fees when you process your debit card like a credit card transaction, so they tend to reward you for signing with bonuses or perks, penalize you with fees for sign-and-PIN transactions, or both.Depending on whether you want yourself or the retailer to foot more of the bill, the bank gets its share either way.If you choose the "swipe-and-sign" option, you'll get rewards that are valuable to you, like cash back or airline miles.If you use your debit card like a credit card, the bank may offer more extensive fraud protections, so check their policies in that area as well.If you can get a reduced fraud liability by signing instead of entering a PIN, you should take it.Some people think "swipe-and-PIN" is more secure than others.Fraud can happen to consumers who use either method.
Step 8: Prepare for the chip technology.
In Europe, much of Asia, and many other parts of the world outside the United States, credit cards have already switched over to using embedded chip technology for added security.The change will eventually make its way to debit cards in America.There are two types of chip cards, one of which provides slightly improved security and the other which is more fraud-resistant.The standard in Europe is "Chip-and-PIN".You slide a chip card into a card reader, wait for a notification, then remove it.The process is the same.During the long transition period, chip cards have magnetic strips so that they can still be used with older card readers.When chip technology becomes commonplace for U.S. debit cards, new considerations on the smartest and safest ways to use them will have to be determined.