Question about debit cards?

Question

i just recently got a debit card and i went to a department store and bought a few things and used my debit card. i had like 300 dollars on it. anyways usually i swipe my card through and type in my pin number but this time i handed it to her and she swiped it through and handed me a receipt asking me to sign it. i did and ive seen some people do that before but i was just wondering whats the difference? ive heard ppl try to explain something about debit or credit and cash back, but i didnt get any cash back and she didnt ask me if i wanted debit or credit? lol i dont know im just confused and would like to understand.

Answer 1

Hi Amanda,

A debit card is a "dual purpose" card ... that is it can function like a "Plastic check" or SORT of like a credit card, to make purchases.   The biggest difference between your debit card and a credit card is that a debit card immediately takes the money out of your checking account or savings account and a credit card is actually a credit account where you are essentially being loaned money by the bank that issues the card.  A debit card is a MUCH better thing to use to avoid getting in massive debt.  Does that make sense so far?

OK ... here's where it can get a little confusing, so I hope I make sense.   Because a debit card immediately takes the money out of your bank account, the stores would PREFER to know that you have money in the account before they let you buy something.   When you swipe your card and enter the PIN number, the computer goes out and checks your account balance to make sure there is enough money in the account and then essentially automatically deducts the money from your account.   BUT for this to work, the cash register / computer at the store needs to be able to contact your bank electronically to do the verification.  SO ... if the cash register computer modem (i.e. data phone line) isn't working OR the lines are busy, etc. the cash register can't check your  balance or do the debit.  The store COULD just have you wait a while and try again, but rather than waste your time they just process it like it's a credit card charge.   The money is still withdrawn directly from your account like a debit transaction ... but because it first goes through the credit system it may take an extra day before the money is actually withdrawn from your account.

Bottom line ... if you're using a debit card, it's a direct with drawl from your checking or savings account ... regardless of whether they use the electronic PIN number method or the paper signing method.

The cash back doesn't have anything to do with it ... it's more of a computer problem issue.

Hopefully that makes sense ... don't sweat it.  It's just trivial bank processing stuff.

Answer 2

Youll be able to buy anything on a credit card, up to your limit, even if you dont have the money and make payments monthly.  

A debit card is pretty much like a direct link to your checking account, whatever money you spend is taken directly out of your account, if you dont have the money, you'll overdraw your account and be charged an overdraft fee by the bank.  You dont make payments on a debit card, it all comes out in one lump sum.