What Are Debit Accounts?
A debit account is a checking account that allows you to make withdrawals using a debit card, also called an ATM card. These withdrawals are made when you purchase items using your card or request cash from an ATM. A debit card is not like a credit card where you pay items off at the end of the month. A debit card allows you to make payments directly out of your account and works the same way as a check--only faster.
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How To Get a Debit Account
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When you open a checking account, most banks will ask you if you want a debit card. If you have a checking account but no debit card, contact your bank to request one. In most cases you must be 18 or older, but some banks allow minors to have a card if they are at least 16 and an adult signs as a joint account owner. Once you have your debit card, your checking account is considered a debit account. You can still write checks, but you will also be able to pay for merchandise using your card and withdraw cash from ATMs.
How To Use a Debit Account
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Once you receive your card, you need to activate it by using it at an ATM or calling the debit card company. You will also receive a PIN with your card, which is a four-digit code. Each time you make a purchase or use an ATM, you input your code to verify that you are the legitimate owner of the card.
Once your card is activated, you can use your debit card to pay for items just like you would a check. Most businesses have a credit/debit card reader through which you will slide your card. Make sure the magnetic strip is pointed in the direction indicated on the machine, as there is no one way to swipe a card. Once you've swiped your card, you will need to input your PIN and sign your name to approve your purchase. At some machines, you may also be able to request cash back. This amount will be added to the total of your purchases and given to you by the cashier.
You may also use a debit account to make online purchases by entering your name as it appears on the card, the card number and expiration date on the front and the three or four-digit security code on the back.
ATMs are another way you can use your account. These machines let you check your balance, make cash withdrawals or make a deposit. You need to swipe your card and enter your PIN, and then you are free to make transactions without ever entering your bank.
And of course, you may also still write checks off your debit account, just like a traditional checking account.
Benefits and Drawback to Using a Debit Card
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A debit card is easy to use and is accepted at most businesses, even businesses that do not take checks. The cards are small, easy to carry and are periodically replaced by your bank free of charge. You never need to purchase them, and you will not run out of them like checks. Using a debit card, you can also make online purchases, and all purchases are processed by your bank immediately instead of taking several days to clear as a check may. You will never accumulate a bill or pay interest like on a credit card because the money is instantly withdrawn from your account.
One drawback to a debit card is that the bank may impose a daily spending limit. Not all banks do this and sometimes limits can be lifted, but be certain you know the limits of your card before making large purchases. Another drawback is that a card is easy to steal. A thief does not need to actually have your card; just having the information on it is enough to make large online purchases. Since the funds disappear from your account immediately, it is also impossible to stop payment as you might on a check. If your card information is stolen, the bank needs to shut your card down and issue you a new one. Even after this, the effects of identity theft are far-reaching and can take time to reverse.
Taking Card of Your Debit Card
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Never bend, fold or deface your debit card. This can result in card scanners being unable to read them. Also do not keep your card near a computer, stereo system or any other magnetic field for long periods of time, as this can ruin the magnetic strip. Keep your card in a wallet or other safe place where it will be protected from wear and scratches, and always know where your card is.
Memorize your PIN. Never write it down and never give anyone your PIN, especially over the phone. This increases your risk of identity theft. When using your PIN, enter it discreetly, shielding the keypad with your hand or body if necessary. Review your bank statements promptly to make sure that you can account for all the debits. If anything suspicious, such as large or repetitive purchases appear on your statement, notify your bank immediately.
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References
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