What is a Debit Card?
Debit card is a payment card where goods could be purchased easily through the linked bank account. This card also helps the cardholder to withdraw the cash from ATM (Automated Teller Machine). Debit cards may have different names based on the financial institution or the country where they are issued. Its major purpose is to be cash free while going somewhere. Debit card does the work as a electronic cash payment directly through the bank account.
How a Debit Card works?
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| Fig: Debit Card |
Here we will be discussing about how a debit card would work for making your life convenient. Debit card could be used for various purposes and below are mentioned about the card with its issuance and benefits from it:
Card Issuance
- After you open a bank account, the bank will issue you the debit card as per the request of the bank account holder only. The card include the unique card number, expiration date and a chip that usually contains confidential information of the cardholder.
- The debit card will be linked with the specified bank account and after every transaction the money will be deducted from that bank account
- You can only make transactions through debit card when you have sufficient balance in your bank account. No transaction greater than your bank balance could be made.
Making Purchases:
- When you want to make purchase on a store or on online websites, you need to provide the debit card information and the card information is verified and send a request to your bank to authorize the transaction.
- After bank receives the request, it verifies if you have sufficient balance in your bank account in order to purchase. The bank authorizes the transaction only if there is sufficient balance in the account.
- Once transaction is authorized, bank deducts the amount purchased from your bank account and the amount transfers to the seller's account.
ATM Withdrawals:
- In order to withdraw money from ATM, you need to insert the debit card in the machine and enter the pin for verification.
- You can easily withdraw desired amount from bank account in the form of notes.
- There will be limit for withdrawing money for certain period of time which might differ according to the account type and the financial institution.
Common Types of Debit Card
There are various kinds of debit cards available nowadays with its own unique feature and benefits. Different financial institutions like bank provide various services of debit cards. Here, we will be discussing about 5 commonly used debit cards.
Standard Debit Card
This is the most commonly used debit card issued by banks. This card helps the cardholder to make the online transaction and even withdraw money from ATM but it only allows to access the fund available in the linked bank account. Most people prefer this debit card. Its example are Visa debit card or Mastercard debit card. So, it usually has a logo of a Visa or Mastercard.
Prepaid Debit Card
We know, standard debit card is directly linked with the bank account but its not the case with prepaid debit card. It is not directly linked with the bank account. Instead the desired fund in loaded in the debit card at first then only purchase or withdrawn could be possible up to the loaded amount in the card. It is most helpful in limiting oneself in spending appropriate money in certain period of time. Its example is Bluebird Prepaid Debit Card.
Business Debit Card
These cards are specifically designed for running the business activities. It is mainly used by the business owners and their employees. Managing business expenses, track spending and separating personal and business finance would be even more convenient. This card usually provide features like expense management tools, spending limits and integration with accounting software. Its one of the example is Chase Business Debit Card.
Student Debit Card
Student debit cards are specifically designed for the students. These cards helps to ease various daily activities of the students. These cards are issued by banks with special features and benefits tailored to the needs of students. Some of its major features are student discounts, lower fees, budgeting tools, parental controls, education and resources and limited spending controls. These things helps to ease the students and make them financially aware. Wells Fargo Student Checking Account Debit Card is one of the student debit card.
Virtual Debit Card
Virtual debit cards usually known as online or digital debit cards are issued electronically. These cards don't have physical presence. It is usually linked with your bank account and works similar to the physical debit card. You can make easy transaction and withdraw money from it as well. But virtual debit cards provide an extra layer of security as they are often limited in use to a single transaction or a specific time period, reducing the risk of fraud or unauthorized use. Revolut Virtual Debit Card is one of its example.
These were just the few types of debit card. There are many more out there provided by financial institutions. Every financial institutions provide different kinds of debit card as per the necessity of the bank account holder. Not every debit cards will be provided in each and every financial institutions. So, its always better to choose right financial institution to get the benefit of required debit card. The debit cards may also vary according to the country you reside as every country provide different and limited kinds of debit card.
Overall, debit cards could be very useful in day to day life due to its portability and efficiency. People could take various benefits of the debit cards. Its always better to move on with the current market trend just to be one step forward in the financial world.