In the past few decades, the use of debit cards has become commonplace.

In fact, in the United States, the use of debit cards is so widespread that they've replaced checks as a method of payment.

But what is a debit card, exactly, and how does one work? Read on to find out the basics of this payment option.

Debit Card Definition

Simply put, a debit card is used to make purchases. While debit cards look nearly identical to credit cards, and are used in much the same way, there are some key differences. When you use a credit card, you essentially borrow money that you will later have to pay back — plus interest.

By contrast, debit cards are linked to your checking account. When you make a purchase using a debit card, it withdraws money that is already in your account. Debit cards should not be confused with ATM cards, which can be used only with ATMs and are not able to make purchases.

How Does A Debit Card Work?

You can use a debit card at most places where payments are accepted. That means you can use it in a brick-and-mortar shop, on an online payment portal, or even over the phone when calling a trusted merchant.

Most debit cards have an embedded microchip that contains your payment account information. When making an in-person payment, you can insert the card, chip-end first, into a payment terminal. Or you can tap the card against the terminal if the card reader allows contactless payments. 

You can use a debit card at most places where payments are accepted. That means you can use it in a brick-and-mortar shop, on an online payment portal, or even over the phone when calling a trusted merchant.

Your card will typically also have a magnetic stripe that you can swipe at a payment terminal if the merchant doesn’t have a chip terminal.

Once you insert, tap, or swipe your card and specify that you’re making a debit purchase you'll likely be asked to enter your four-digit personal identification number (PIN). This is a security measure that verifies you're authorized to use the card.

When making an in-person purchase with a debit card, the merchant may give you the option to receive additional cash above the purchase price. However, be aware that some merchants may charge a small fee when you use this convenience.

You can also use the debit card online or over the phone. However, always make sure that you're paying a trusted entity first. Then, simply supply your debit card number, the expiration date found on your card, and your three- or four-digit security code, also known as a card verification value (CVV) code. Usually, you can find this code on the back of your debit card. You may also be asked to supply your billing address's zip code for verification.

No matter how you make a purchase, the purchase amount will be withdrawn from the checking account linked to your debit card. Be careful not to spend more than what’s in your account. Otherwise, your bank might charge you an overdraft fee.

Debit cards can also be used at ATMs to withdraw cash directly from your checking and/or savings account, as well as to initiate any other kind of ATM transaction, including making deposits and checking your balance.

To do this, you will be asked to enter the card chip-end first into the ATM's card slot and enter your four-digit PIN to access your account. Keep in mind that using an ATM that’s not part of your bank's network will likely incur a fee.

What Are Common Uses Of A Debit Card?

People commonly use debit cards to make purchases and to withdraw cash from an ATM. These days, most merchants that accept credit cards also accept debit cards.

Debit cards can be used in place of cash, personal checks, and credit cards.

Benefits of A Debit Card

There are many advantages to using a debit card:

They're Widely Accepted

Because most stores, service providers, and venues accept debit cards, they're a convenient way to pay. In fact, these days, some vendors have opted to become cashless, making a debit card a must-have.

In addition, having a debit card in your wallet means that you can always access an ATM to withdraw cash.

They Come With Security Features

Most debit cards have security features such as embedded microchips, PINs, and CVV security codes that make it hard for would-be thieves to fake. If your debit card is ever lost or stolen, notify your bank immediately. You can cancel your old card and order a new one without worrying about someone stealing your checking account number.

They Don't Charge Interest

Unlike credit cards, debit cards don't require you to make interest payments. That's because when you use a debit card, the funds are withdrawn from your checking account right away. You're not borrowing money from a bank, as with a credit card. 

They Usually Don't Involve Annual Fees

Also, unlike credit cards, debit cards typically don't require you to pay annual fees for the benefit of using them. Keep in mind that there may be monthly fees associated with your checking account. However, many banks offer ways to waive these fees (for example, if you keep a specified minimum balance in your account or if you receive a regularly scheduled direct deposit).

They Come With Checking Accounts

Most banks will automatically issue you a debit card when you open a checking account. You don't have to worry about applying for a separate card and possibly affecting your credit score, the way you would if you open a credit card.

How Do You Get A Debit Card?

To get a debit card, simply open a checking account at a bank or credit union. You can do this online or in person. Here are some of the requirements you may need to provide:

  • Your state-issued photo ID or passport
  • Your Social Security number
  • Proof of your address, such as a utility bill, mortgage documents, lease, or mail sent from a government agency
  • An opening deposit — some banks might require a minimum amount to open a new account

Once you open the account, your bank or credit union may give you your debit card right away. Or you may have to wait for it to arrive in the mail. In this case, your bank may give you a temporary card you can use right away. In addition, you might be able to add your account to a digital wallet such as Apple Pay before your card arrives in the mail.

After you receive your debit card, you can typically activate it by visiting your bank's website or mobile app or by calling the activation phone number printed on a sticker on your card.

Debit Cards: Convenience In Your Wallet

Debit cards are among the most convenient ways to make a payment, whether you buy an item at a store, pay a bill online, or anything in between.

When used responsibly, they're safe. In addition, they’re easy to get — after all, they come standard-issue with most checking accounts.

All of these factors make debit cards a must-have for your wallet.