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A debit card is a type of card that connects to your checking account and draws funds from that account when making a purchase. Debit cards are a very common payment choice these days, largely replacing cash and checks as a speedier option. But what is a debit card and how does it work? And how does it differ from other cards?

How Does a Debit Card Payment Work?

A debit card has a 16-digit identification number, a three-digit security code, and a four-digit personal identification number (PIN). When you make a transaction in person, you slide, tap, or insert the debit card as you would a credit card, and enter your PIN if necessary. Debit cards also have a chip that generates a one-time use code for each transaction. When online, you enter the identification number, expiration date, and security code to make purchases.

The debit card connects directly to your checking account, and then the merchant places a "hold" on that money.

The merchant later sends debit card transactions to their bank for processing, and this is when the money is transferred. Most merchants complete this step a few days after the purchase. During this process, the payment will typically show up as "pending" on your checking account history.

Debit Cards vs. Credit Cards

Debit cards may look and act the same as credit cards when you're making purchases, but they are very different payment options. A credit card does not connect to a checking account; instead, you're borrowing money against a line of credit.

This means that credit cards create debt and bills when you use them, which can affect your credit score. They can also generate extra interest payments, typically if you don't pay off the debt to your bank by the payment due date. These payments are based on the credit card's interest rate and other terms. Credit cards may also have annual fees.

Both credit and debit cards are secure, reliable payment options, but there are some differences that are worth understanding. Specifically, a credit card differs in that it depends on your borrowing limit, rather than the money in your account. Consumer protection laws make debit cards somewhat safer to use in case of theft. However, it's important to pay back credit card debt to avoid snowballing interest.

The Benefits of a Debit Card

When you're considering the benefits of carrying and using a debit card on an everyday basis, here are a few things to keep in mind:

  • Safety: Today's cards use EMV chip technology, the kind you need to insert. Chip technology along with contactless cards that allow you to tap and go are more secure than magnetic strips, and they can prevent common theft attempts. Some banks, including KeyBank, also offer zero liability, fraud monitoring, and ID theft resolution services for debit cards. You even have options to immediately freeze cards if you suspect something is wrong.
  • Convenience: A debit card is fast and easy-to-use, making it the perfect alternative so you don't need to carry cash or wait for change.
  • Financial Wellness: With a debit card, you can only spend what you have in your checking account. In other words, you won't be able to go into debt by using it.
  • Record Keeping: All of your transactions are viewable online or on your monthly statement, ensuring you can keep track of your spending habits.
  • Recurring Payments: If you have bills you pay each month, you can set up recurring payments with your card to help you save time and money over mailing a check to cover each bill independently.
  • Online Card Management Tools: Many banks now offer online tools to help you manage your card and account. It's easier than ever to activate a new card, lock and/or unlock it, report your card as lost or stolen, or order a replacement for a damaged card.

This information and recommendations contained herein are compiled from sources deemed reliable, but are not represented to be accurate or complete. In providing this information, neither KeyBank nor its affiliates are acting as your agent or are offering any tax, accounting, or legal advice.

By selecting any external link on, you will leave the KeyBank website and jump to an unaffiliated third-party website that may offer a different privacy policy and level of security. The third party is responsible for website content and system availability. KeyBank does not offer, endorse, recommend, or guarantee any product or service available on that entity's website.

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