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Debit Cards - Everything You Need To Know

June 10, 2022

Are They Better For Your Spending Habits?

Debit Card - How It Works

When you use a debit card, the amount of the payment is subtracted from the checking account to which the card is linked. You can also withdraw cash at an ATM. Some transactions may instantly debit your account and sometimes it may occur a few days later, depending on how the purchase is processed. Most point-of-sale transactions at the register will require you to choose whether you would like to use the Debit or Credit option. Choosing debit will require your PIN and will be deducted from your account immediately. Choosing credit will require your signature and in most cases applies a hold of funds on your account instead of deducting the funds immediately. This hold may take up to 5 business days to clear your account. Both of these methods are free when using your First Source debit card.

There are generally no limits on the number of transactions you can make with a debit card in a single day. Depending on the bank or card issuer however, most debit cards have daily withdrawal and point of sale limits.

Young man using a laptop and credit card at home

Debit Card Benefits

For ease of use, debit cards can’t be beat. You don’t have to worry about keeping cash in your wallet, and there’s always a record of how much you spent, and where you spent it, on your statement.

They’re accepted almost everywhere, in large part because most cards are part of either the VISA® or Mastercard® payment systems. In fact, many stores and other sellers prefer debit to credit cards because they pay lower fees on debit cards.


Debit cards usually have low or no direct fees. However, you’ll need to watch out for overdraft fees, possible out-of-network ATM fees, any applicable PIN transaction fees, and any monthly fees to maintain the checking account that the card is associated with. First Source has over 30,000 nationwide free ATMs, plus an Only One Rewards program which will reimburse out-of-network ATM fees, up to $5 per month. Utilizing your debit card for purchases can also earn you great rewards. To learn more about our rewards program visit our Only One Rewards page

Overdraft Protection

Many credit unions and banks offer overdraft protection to those who qualify and have a checking account. This type of protection usually requires an application and approval process, much like a loan. Having it means that if you try to spend more than is in your account, the credit union or bank will cover that amount for you. Sounds great, but overdraft protection can be costly. In addition to the amount you’ll have to pay back, you’ll also be charged interest on the amount that is transferred to your account and often a fee as well.

Some account owners choose not to have overdraft protection because without it, you can’t spend more than is in your bank account. This is a great way to help keep your actual spending in line with what you can afford. Of course, whether to use overdraft protection depends on how well you know your own spending habits. Having it can help you avoid occasional embarrassment in social situations but it may cost you more in the long run. Visit our Overdraft Protection page for more information.

Debit Cards vs Credit Cards

While debit and credit cards appear to be very similar, and you use them in a lot of the same ways, they are in fact very different. With debit cards, the amount of a purchase is deducted directly from your own checking account balance. When you use a credit card, however, the amounts you spend are recorded, appear on your monthly statement, and must be paid back in full by the due date to avoid interest charges. This is good if you don’t have the funds today but will be able to pay them back by the time the credit card bill is due. 

In addition to purchases, debit cards are designed for cash withdrawals. If you use an ATM within your bank network, you usually won’t pay any fees. As soon as you withdraw money from an ATM using your credit card, you’ll pay an upfront fee for the cash advance and you’ll begin to accumulate a finance charge with an interest rate higher than your card’s APR (which is the rate you pay on purchases.)

There is one area in which credit cards offer a real benefit that you don’t get with debit cards. Using a credit card to pay for purchases helps you build credit history. Making on-time payments and paying more than the minimum payment required can help to build good credit. Visit our Credit Card page for more information about the types of credit cards First Source offers. Purchases using your debit card do not help you build your credit history.

“I Didn't Make That Purchase.”

If someone makes an unauthorized charge on your debit card, you will need to work quickly to resolve the problem. The Electronic Fund Transfer Act, also known as Regulation E, created protections for consumers using certain electronic banking and financial services such as debit card transactions, electronic withdrawals, transfers, and deposits. In situations where fraud occurs, the Act requires consumers and the financial institutions to communicate the fraud within certain timeframes to receive limited liability for the transaction. Consumers will only be held liable for $50 of a fraudulent transaction if reported within 2 days, $500 if reported within 60 days, and potentially unlimited liability after 60 days.

Prepaid Debit Cards

Unlike a regular debit card, which gives you access to the amount in your checking account, a prepaid card is loaded with a certain amount of money before use. When that money has been spent, the card must either be reloaded or thrown away.

Not all prepaid debit cards are created equal. Some have high fees that eat away at your balance. Not all provide consumer protections, such as replacing the value on a lost or stolen card. And some can be used in only one store or chain of stores. So, it’s important to pay attention to the details before buying one.

Mobile Wallet

A Mobile Wallet allows you to have all your debit and credit cards in one location on your electronic device. Along with convenience, this will also add another level of security to your card usage. You can pay with your phone or mobile device at any register that accepts Apple Pay, Samsung Pay, Google Pay, Fitbit Pay and Garmin Pay. In some cases, just by tapping your phone to a compatible terminal can complete a transaction.

Once uploaded into your “digital wallet”, each card has its own “token” which takes the place of the actual card number. Tokens mask card information, creating a layer of security for each transaction. If a merchant were to have a breach, your information would not be compromised. Overall, this can be one of the most secure ways to utilize your debit card. Visit our Mobile Wallet page for more information.

Debit cards have taken the lead as the preferred method of payment over writing checks. They are considered safer than carrying cash, more convenient to use online or in emergencies, and a debit card can be replaced if it’s lost. Debit cards are typically free to use and bridge a secure connection to your checking account. Visit our Debit Card page for more information.

Live Smarter

Don't have a First Source debit or credit card? Visit our Personal Checking Account page to see what services are available when you open an Only One Checking Account. If you have any questions, we are here to help. Call 315-735-8571 to talk about your options or make an appointment with one of our friendly Member service representatives today.

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