Explanation:
Debit cards are normally issued by financial institutions and are extremely useful because they eliminate the need to carry cash. These cards are not the same as credit cards. When credit cards are used, the credit card company issues the payment for the purchase and grants a loan to the cardholder for the purchase that was made. Debit cards, on the other hand, fund the purchase immediately out of the cardholder’s bank account. This means that the account to which the debit card is linked must have available funds at the time of the purchase. Also, debit cards require a password to be used; this particular requirement also differs between a debit card vs a credit card. The latter doesn’t require a password to be used. In essence, a debit card is essentially like using cash to pay for things.
In a nutshell:
- Debit cards eliminate the need to carry cash or physical checks to make purchases, and they can also be used at ATMs to withdraw cash.
- Debit cards usually have daily purchase limits, meaning it may not be possible to make an especially large purchase with a debit card.
- Debit card purchases can usually be made with or without a personal identification number (PIN).
- You may be charged an ATM transaction fee if you use your debit card to withdraw cash from an ATM that's not affiliated with the bank that issued your card.
- Some debit cards offer reward programs, similar to credit card reward programs, such as 1% back on all purchases.
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