Debit Cards 101

Opening your first checking account is a big step in starting your financial journey. Understanding the basics of debit cards can help you effectively and conveniently manage your finances. Read on to learn about debit cards, how they differ from credit cards, and their advantages.

What is a debit card?

Debit and credit cards are both plastic cards used for payments, but with one big difference—you should think of a debit card as cash as it’s tied to funds in your checking account. When you use a debit card to pay for purchases online or in person, those funds are removed from your checking account almost instantly. You can also use a debit card at ATMs to withdraw cash, transfer money, or check your balance. Some transactions, like getting cash from an ATM, require you to enter your personal identification number (PIN). Debit cards may also offer rewards, like Texell’s BONUS Debit Card, which allow you to redeem BONUS Reward Points for cash back, gift cards, and more.

What’s the difference between a credit card and a debit card?

Credit cards allow you to borrow money to cover a payment. The credit card company pays the merchant, and then you repay that amount when you receive your monthly statement. Credit cards charge interest on any unpaid balance, so it’s best to pay off the balance each month. The amount of spending on a debit card is determined by how much money you have in your checking account or your daily spending limit, while credit cards have a credit limit.
Since debit cards withdraw funds immediately, be aware of your account balance and avoid making transactions that cause your account to become negative or overdrawn. Set up your account in Digital Banking and track your account balance daily. Learn more about how to manage your account in our article 6 Tips to Avoid Overdraft Fees.

Do debit cards have fees?

Fees are extra charges to an account to cover the costs of managing certain transactions, like overdraft fees or replacing a card that’s lost or stolen. Most debit cards don’t have an annual, monthly, or per transaction fee, but there are other fees to consider.

1. ATM fees – If you use an ATM that is not in your bank or credit union’s network, you may be charged an out-of-network ATM fee. Texell has more than 92,000 free ATMs worldwide, and you can find the one nearest you at Texell.org/locate.
2. Debit card replacement fees – If you need a new debit card, some banks and credit unions may charge you a replacement fee or you may incur a fee to expedite delivery of the new card.
3. Courtesy pay, overdraft, or non-sufficient funds fees – These fees occur when you spend more than what is available in your checking account.

What do I do if my debit card is lost or stolen?

If you lose your card or have it stolen, report it to your bank or credit union immediately. Most financial institutions allow you to report a lost or stolen card in mobile banking. Act quickly and make sure your financial institution has your current contact information so that you can recover your account if needed.

Since your debit card is tied to your checking account, guard it carefully to stay safe from scammers. Keep it in a secure place and don’t share your PIN with anyone. When entering your PIN, cover the keypad and be alert for suspicious activity. Use secure ATMs and check for possible fraudulent devices. Read more safety tips in our article Protect Yourself at the ATM.

Besides keeping your physical card safe, be careful when using your card online. If you add your card to payment apps like Apple Pay or Google Pay, make sure the app follows standard secure procedures. Most major payment apps use data encryption and tokenization, a process of creating a unique virtual number for transactions instead of your actual card information. Research payment apps and only use those that are established and reliable. Trusted apps have strong authentication requirements that use PINs, unique passwords, and biometrics, like a fingerprint scan.

You can further protect your card by being aware of scammers who attack online or through text messages. These scams, called phishing, appear to come either from your bank or credit union or other business to trick you into giving away personal information. Scammers then use this information to hack an account and make fraudulent purchases. If you receive emails or text messages from an unknown source, don’t click any links. Instead, find the correct contact information for the business or financial institution and reach out for any concerns.

Use your debit card wisely

It can be tempting to impulse buy or overspend when you’re using a card instead of cash while shopping. Creating a budget will make sure you’re making the best use of your debit card and aren’t spending more than you’re bringing into your account. If you have a part-time job or are self-employed with a job that doesn’t bring in a set income, budgeting can be a challenge. Read 6 Budgeting Musts with a Gig Job for tips.

Make the most of your debit card and get started on your financial journey by following these steps. If you have questions or concerns about your Texell account, reach out to Member Services at 254.773.1604 or send a secure message from Digital Banking.

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