Definition: A debit card is a bankcard that allows depositors to pay third parties directly from their bank account balances electronically.
What is the definition of debit card? 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 grant 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 differences 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.
Debit Cards or Credit Debit Cards are electronic plastic cards that are used as a substitute for cash. Bank Debit Cards help reduce the need for carrying cash and checks. Debit cards are directly linked to a cardholder’s bank account. Whenever a card holder withdraws money from an ATM or uses the debit card for making payments, his/her account balance is automatically reduced.
The same financial institutions offer both debit cards and credit cards. Both cards offer special rewards, such as points and cash back on purchases made through the card. Debit cards and credit cards can be used to make online payments with the help of the Pin number assigned to them. They can be used to withdraw money from ATMs, depending on the cash limit available on these cards.
Debit cards and credit cards differ in some significant ways. In the case of a credit card, the issuer offers credit and overdraft facilities. This facility is not available with a debit card, which will only debit payments from existing and available funds within the cardholders account. A credit cardholder therefore has a monthly bill to pay in every month that the card is used. If they don’t pay that bill, high interest charges are applied. A debit card holder is free from the hassle of paying those bills, and from the risk of building up large debts to credit card companies.
Debit cards offer the following benefits:
Debit cards, however, do entail certain limitations, such as: