How Does a Debit Card Transaction Work?

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A debit card transaction allows individuals to swipe a card that works like a credit card, but money comes directly from the bank account of the debit card owner. Avoid accruing interest on purchases by using a debit is card with advice from a registered financial consultant in this free video on debit cards.

Part of the Video Series: Personal Finances & Money Management
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Video Transcript

This is financial adviser Patrick Munro talking about how does a debit card transaction work. A debit card is really the crystallization of the cashless society that was promised years ago. If you open up a bank account nowadays, you will automatically be issued a debit card from the financial institution that will have your name and a very specific account number on it. It will normally have the VISA or MasterCard logo embedded into it as well. It looks like a credit card, it acts like a credit card in all senses of the word. However when you use it at a product or service, a vendor, for whatever you need, the money that you get out of your debit card automatically comes out of your checking account or savings account as it were. So therefore you're not accruing interest charges, you're actually spending your own money in a convenient and safe format. When you present yourself at a credit card terminal for payment with your debit card, you simply hand it to the representative, they swipe that and many times there's not even a signature required because they know that money is going to be automatically taken out of your account. This is financial adviser Patrick Munro talking about how does a debit card transaction work.

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