What Is a Debit Card and How Does It Work?

Quick Answer

A debit card is a way for you to spend money in a linked checking, money market or prepaid debit account. It offers more convenience and security than cash.

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A debit card is a type of payment card that's linked to an account in the cardholder's name. It allows the user to make purchases with money they have in their account or access the cash via a withdrawal. Here's what you need to know about how debit cards work and how to get one.

How Do Debit Cards Work?

A debit card provides direct access to the funds in a checking account or money market account. You can use a debit card in a variety of ways, including:

  • Making purchases online or in person
  • Withdrawing money from your account
  • Paying bills
  • Transferring money to another bank account
  • Sending money to friends and family members via a peer-to-peer payment service

Debit cards typically come with a personal identification number (PIN), which you may need to provide for in-person purchases and ATM withdrawals.

Prepaid debit cards work like traditional debit cards, except they're linked to prepaid card accounts rather than a checking or money market account. They allow you to access the money that you've loaded onto the card via direct deposit, bank transfer, mobile checks, cash loads and more.

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Common Debit Card Fees

Bank accounts and prepaid debit accounts may charge fees when you use your debit card for certain transactions. Depending on the bank, those fees can vary, and some don't charge any fees at all.

That said, here are some of the more common debit card fees to watch out for:

  • Monthly maintenance fee: Some prepaid debit cards come with a monthly fee attached, which you may or may not be able to waive. Checking and money market accounts may also charge a monthly fee, but you can often get it waived with certain activities.
  • ATM fee: Most banks have a network of fee-free ATMs, allowing you to withdraw money without an extra charge. If you go outside of the network, however, you may be subject to fees from your financial institution and the ATM owner. These fees are typically a few dollars per transaction. Some banks may offer to reimburse out-of-network ATM fees.
  • Insufficient funds fee: If you make a purchase or other transaction with your debit card and you don't have enough cash in the account to cover it, your bank could decline the transaction and charge an insufficient funds fee—also called nonsufficient funds (NSF) fee. The average NSF fee is $34, according to the Consumer Financial Protection Bureau.
  • Overdraft fee: If you make a purchase or other transaction with an amount that exceeds your account balance, and your bank spots you the difference, it may charge you an overdraft fee. This fee is typically around $35, according to the Federal Deposit Insurance Corp.
  • Foreign transaction fee: If you use your debit card to make purchases abroad, your bank may charge a foreign transaction fee, which can range from 1% to 3% of the purchase amount.
  • Cash load fee: Most bank accounts don't charge you for depositing cash into your account. However, prepaid debit accounts and some online-only checking accounts with no physical branches may allow you to load cash onto your account at popular retail stores. The catch is that the retailer may charge a fee—usually up to $4.95—for the transaction.

Can You Build Credit With a Debit Card?

Unlike credit cards, traditional debit cards, including prepaid cards, don't normally help you build your credit history. This is because debit cards typically only allow you to access the money you already have. There's no line of credit that you're using to borrow money, so there's no credit relationship.

However, there are some newer debit cards that have some credit-building features.

For example, the Experian Smart Money™ Digital Checking Account & Debit Card can help you build credit without debt by automatically linking to Experian Boost®ø, which gives you credit for eligible bill payments after three months of payments. You'll also pay no monthly fees for Experian Smart Money, have access to more than 55,000 fee-free ATMs worldwide** and could receive your paychecks up to two days early when you enroll in direct deposit. You can get an Experian Smart Money Account through a free or paid Experian membership, which also gives you access to your FICO® Score , Experian credit report and more. See terms at experian.com/legal.

How to Get a Debit Card

When you open a checking account or money market account, you'll typically get a debit card to go with the account. With a prepaid debit card, you'll apply directly for the prepaid account.

In either case, you can generally open an account online, but some banks may also allow you to do so by phone or in person at a local branch. Regardless of your preferred method, you'll typically need to provide the following information:

  • Full name
  • Social Security number or Individual Taxpayer Identification Number
  • Date of birth
  • Street address
  • Email address
  • Phone number
  • Government-issued ID

Some banks may also require a minimum opening deposit when you open the account, which you may be able to provide via a transfer from another bank, a check deposit or cash.

After you open the account, you'll typically receive your debit card in the mail within a week or two. Once you do, follow the included instructions to activate the card so you can start using it.

How Debit Card Fraud Protection Works

If someone steals your debit card and uses it to make unauthorized purchases, there are limits to how much you're liable for the fraudulent transactions.

The Electronic Funds Transfer Act limits your losses on both debit and ATM cards based on when you report the loss.

Debit Card Fraud Protection
When You Report Your Card Stolen Your Maximum Liability
Before unauthorized charges are made


Within two business days of learning about the loss or theft


More than two business days after you learn about the loss or theft, but fewer than 60 calendar days after your statement is sent to you


More than 60 calendar days after your statement is sent to you

All the money taken from your account, and possibly more

That said, many banks go above and beyond the federal limits, offering zero-liability fraud protection even if you don't report a stolen card before the thief uses it.

Debit Cards vs. Credit Cards

Debit cards and credit cards often look the same, and both allow you to make various online and in-person transactions. However, there are some key differences between how the two payment methods work.


While the maximum you may lose on fraudulent debit card purchases is the full amount that was stolen, federal law caps the maximum loss on unauthorized credit card purchases at $50, regardless of when you report it.

You're also more likely to get a zero-liability fraud protection benefit from a credit card than a debit card. Finally, if someone steals your credit card and uses it to make purchases, they're using the credit card company's money—not yours. That means you won't have to worry about your account being depleted and compromising your ability to pay your bills.

Credit Building

While some debit cards have some credit-building features, they may not be as effective as a credit card in building your credit history. As a result, it may be best to use a credit-building debit card and a credit card in tandem to make the most of your everyday spending.

Debt Potential

A credit card allows you to spend more money than you have in your bank account, which can come in handy if you need to finance a large purchase.

But while you can overdraw a bank account, it's not the same as racking up thousands of dollars in debt on a credit card. With many credit cards charging interest rates upwards of 20%, it can take years and high interest costs to eliminate a sizable balance.

If you struggle with overspending, a debit card may be the better choice.

Eligibility Requirements

When you first open a checking account, you typically won't need to undergo a credit check to get approved. With credit cards, though, the card issuer will want to understand your credit history before it can approve your application. Most of the best credit cards require good or excellent credit to get approved.

Your income also typically doesn't come into play when you apply for a bank account or prepaid debit card, but you may be denied a credit card if you don't have sufficient income.


Although there are some debit cards that offer cash back, you're much more likely to get rewards on your everyday purchases with a credit card. What's more, many credit cards offer intro bonuses that can be worth hundreds of dollars, and you may also be able to get certain benefits when you travel and shop that you can't get with a debit card.

While you can use both debit and credit cards simultaneously, think about your needs and your goals to determine which one to use more often when you shop and pay bills.

Frequently Asked Questions

What Is an ATM Card?

An ATM card is another type of card that you may receive with a bank account, particularly one that doesn't come with a debit card, such as a savings account. An ATM access card can typically only be used to review your account balance and make withdrawals from an ATM.

Is It Better to Use Credit or Debit?

Ultimately, it depends on your situation and needs. If you can use a credit card responsibly and generally pay your balance in full each month, the benefits credit cards provide can make it worth using one for most of your everyday spending.

However, if you've struggled with overspending in the past or simply prefer to avoid the pitfalls of credit card debt, consider using a debit card instead. That said, it can also make sense to use a mix of both, so you can enjoy the best of both worlds.

Compare Debit Cards to Find the Right One for You

If you're searching for a new bank account or debit card, take your time to shop around and compare options from multiple banks and providers. Take a look at fees, rewards and other features that are important to you, and pick the account that provides the most value for your needs.