What Is a Debit Card?
A debit card is a plastic card that instantly subtracts cash from a banking account upon use, or from a prepaid amount of money deposited to a financial network. A debit card may be attached to a savings account, checking account or money market account. Unlike a charge or credit card, a debit card purchase incurs no interest. However, a debit card may have usage charges such as a fee for cash withdrawals from an ATM (automatic teller machine). Debit card purchases require a PIN (personal identification number) to make a purchase, although some cards allow purchasing on a credit network that requires only a signature. Signature purchases are common for those enrolled in cash-back reward programs with their financial institutions. A PIN debit purchase is required to get cash back.
How to Obtain a Bank Debit Card
Banks will usually dispense a debit card upon the opening of a new checking account. Some banks are able to create a card on site, while others mail cards to a person's home address. The card bearer then calls a phone number, visits a website or uses the card at a machine to activate it. For savings accounts, a bank will commonly ask if the account holder wants to receive a card. Because savings accounts are meant for long-term deposits, debit cards aren't as necessary. However, many people still get cards for these accounts for fast access to cash in case of an emergency. Many institutions charge for savings transactions above a certain quantity, and debit purchases count toward this total. After that line is passed, a fee of $10 or more is tallied for every purchase. Beware!
How to Obtain a Prepaid Debit Card
For those who can't get a bank account, or don't wish to use an ATM card that is attached to one, prepaid cards are a way to get the same convenience. One easy way to get a debit card is through an online financial payment service such as PayPal. PayPal cards use a person's PayPal account balance as the principle. However, an account holder must have a PayPal account in good standing for 60 days to obtain one. Another method is to go to a check-cashing store or Western Union location and purchase a card. These cards usually cost about $10 plus the amount of cash principle. Once purchased, the cards may be refilled at any location offering the particular service. The biggest drawback to this variety of card is the fee structure. It's common for ATM transactions to cost several dollars in fees and for debit purchases to cost anywhere from 50 cents to $1. There may also be a percentage charged monthly on any balance carried. The third option is to have a percentage of your paycheck go into a debit card. The payment service will mail you a card and will usually charge a nominal up-front fee. These cards also come with plenty of usage fees.
The Best Option
The best option for obtaining a debit card is to open a bank account and keep it in good standing. Barring that, PayPal is the second best choice. If one of these isn't a possibility, then see if life is possible without a debit card. Pay bills with money orders, and use cash for everything else. Not only will this save you the fees of prepaid debit cards, it will teach good money management.
- 2007 The Consumerist / Creative Commons