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Debit Cards

Although they may look the same, all plastic cards do not work the same. In fact, there are two very different kinds of cards in use today: credit cards and debit cards.

As the names imply, credit cards allow the extension of credit and the delay of payment. Debit cards automatically withdraws funds from your account, typically a checking or savings account, at the time you make a transaction.

Debit cards are used most commonly at automated teller machines (ATMs) and for purchasing goods and services directly in retail stores, offices or just about anywhere credit cards are accepted.

The machine-readable plastic card contains a magnetic strip indicating your account number, bank number, and type of account. Debit card users gain access to the issuing institution's computer by using a secret code, their personal identification number (PIN). The PIN should only be known to the card holder.

Costs Associates With Debt Cards

There may be fees for using your debit card. Examples: Some banks charge a fee if you enter a PIN to conduct a transaction instead of signing your name. You may trigger a fee if you overdraw your account using your debit card, just as you would if you "bounced" a check. Or, there could be a charge if you use your debit card as an ATM card at a machine that is not operated by your financial institution. As with other bank products, your financial institution must provide disclosures explaining the possible fees associated with a debit card. Be sure to read the disclosures to avoid an unexpected fe

Lost or Stolen Debit Cards

If your debit card is lost or stolen, notify the issuing bank or institution immediately. According to the Electronic Funds Transfer Act, if notification is given within two business days of discovery of the loss or theft, you may only be liable for $50.

If you do not notify them within the two-day limit, you could lose up to $500. Finally, if notification is not given within 60 days after receiving a statement showing unauthorized withdrawals, you could be liable for everything.

What is the Law?

The Credit Card Fraud Act imposes prison sentences and stiff fines on persons convicted of unauthorized or counterfeit use of credit cards and debit cards. Also, the law makes it a federal crime to use any unauthorized card, plate, code, or account number to obtain money, goods, or services. The Secret Service is authorized to investigate violations under this act.


Debit Card Articles

Debit Card Frequently Asked Questions

Federal Protections of Debit Cards Use

Credit and Debit Cards: What To Do If They're Lost or Stolen


 
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Center For Debt Management

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