Debit cards look similar to credit cards but act like checks, because the money spent with the card comes directly out of your checking account. Most banks have replaced ATM-only (automated teller machine) cards with dual-purpose debit cards that carry a MasterCard or Visa logo and are more useful than ATM-only cards. Debit cards work on the same worldwide networks used to process credit card payments, which means they can be used to get local currency from almost any ATM worldwide and to make purchases wherever MasterCard or Visa are accepted, including online or by phone.
You can use your debit card two ways: 1) with a personal identification number (PIN), to withdraw cash from an ATM or to make purchases and request "cash back" at stores, and 2) with your signature, to pay for goods, meals, gas and services.
You can't use debit cards to charge a purchase and pay it back over time, as you can with a credit card. For your debit card to work, you must have enough money in your checking account to cover transactions, unless you have overdraft protection. If you opt in to "courtesy" (automatic) debit card overdraft protection, the bank will approve debit card transactions that overdraw your account and will charge you an overdraft fee, which average about $30 per transaction. (Learn more in Consumer Action's "The Right Overdraft Protection Plan.")
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