Do You Need a PIN Number on Debit Cards?

Depending on what type of debit card you have, you will need a personal identification number to make cash withdrawals, complete in-store transactions and get into phone-banking systems. Some debit-card users don't need a personal identification number to make purchases at stores.

In such cases, people may choose to never use a PIN. However, debit-card users will likely run into problems trying to withdraw cash from their debit-card accounts without a PIN. Card issuers usually link PINs to customer accounts to allow for cash withdrawals and to prevent fraud.

People who have signature-based debit cards don't need to have PINs to make store purchases. Signature-based cards resemble credit cards because they often have a Visa or MasterCard logo on them.

Cardholders authorize their store purchases by signing for them just as credit-card users do when they make purchases. Unlike credit-card accounts, a signature-based debit card purchase amount is deducted from a cardholder's checking account within two or three days after the purchase.

Some banks issue debit cards that allow users to complete transactions by signing for purchases or entering a PIN. In such cases, the bank usually issues an initial PIN that cardholders can change as they see fit so that the number is easy to remember. You will receive your PIN in a separate mailing from your bank. That way, if the letter containing your card is intercepted on its way to you, the thief can't use it because he doesn't have the PIN.

The initial PIN usually needs to be activated by a cardholder through the bank's automated phone system before it can be used. Cardholders may choose not to activate the number if they don't want to use a PIN. However, activated PINs are needed if cardholders want to withdraw money from automatic-teller machines.

After you get your PIN, you're encouraged to change it to something you will remember. Avoid using something thieves or hackers can guess (if they have other information on you). Don't use your birth date, street address number or last four digits of your phone number.

Some debit-card issuers offer their customers cash rewards for making purchases with their cards. Yet the issuers usually require that cardholders sign for their purchases to receive rewards instead of using PINs. Therefore, people who want to take advantage of receiving a percentage of their purchases back as a cash reward should sign for their debit-card purchases. Cash rewards are usually deposited to customers' accounts by the card issuer on a monthly basis.

Watch out for fees that some card issuers charge; using a PIN may cost you more money. Cardholder agreements list the fees that issuers charge. Debit-card users who thoroughly read their agreements can figure out how to avoid paying some fees. For instance, some banks charge debit cardholders a fee if they complete a transaction by entering a PIN instead of signing for a purchase.

Retailers pay banks a fee for signature-based transactions, which nets more profits for banks. Therefore, banks usually prefer that debit-card customers sign for their purchases. With the advent of new technologies, like chipped cards and contactless cards, PINs may be phased out for many cards in the future.