Debit cards offer the convenience of a credit card but work differently. Debit cards draw money directly from your checking account when you make the purchase. They do this by placing a hold on the amount of the purchase. Then the merchant sends in the transaction to their bank, and it is transferred to the merchant's account. It can take a few days for this to happen, and the hold may drop off before the transaction goes through.

What is a debit card?
A debit card is linked to your checking account. It allows you to access money directly from your account for transactions, and also works as an ATM card to directly withdraw cash.

You typically can't spend any more than the amount you have in your account or your transaction will get declined. Debit cards don't charge interest or annual fees, and balance transfers are not allowed. Debit cards typically don't offer perks or rewards. However, at some banks you can earn interest on the money in your checking account.

How do debit cards work?
Your debit card places a hold on the purchase amount. The merchant sends your transaction to the bank, and your bank sends the money to the merchant's account. ATMs and many stores will require you to enter a PIN to use your card.

Pros and cons of using debit cards
Here are the pros and cons to consider when deciding whether or not to use your debit card:

Pros
Difficult to overspend: Having a debit card makes it difficult to spend funds that you don't have.
No interest payments: There is no balance to pay off each month, so you don't have to worry about interest accruing.
No damage to credit history: If you're unable to pay your bills consistently on time, it might be better to access money with a debit card rather than a credit card as debit cards won't affect your credit score.
Can be used in stores and at ATMs: You can use your debit card to make purchases as well as get cash from the ATM.
Protection against fraudulent activity: As long as you report the charges promptly, you can get reimbursed for unauthorized debit card transactions with zero liability protection.
Cons
You can't build credit: Debit cards won't help you build any credit history, which is important for boosting your credit score.
You may have additional fees: Even though you won't have to pay interest, you still may have to pay ATM fees if the machine you're accessing is out of network.
Must have funds in your account: A debit card uses funds directly from your checking account and those transactions are typically processed within 1 and 3 days, so you must have funds in your account to cover those purchases.

Debit cards usually have daily purchase limits, meaning you can't spend more than a certain amount in one 24hour period.

A debit card is a card issued by a bank or credit union to checking account holders that is used to access funds in the account. You can use a debit card to access cash from an ATM or to buy goods or services. Unlike with credit cards, you can't go into debt using debit cards (except perhaps for small negative balances that might be incurred if you have overdraft protection).


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