What is Debit Card | Advantages and Disadvantages [Hindi/Urdu] There are many different types of cards available, a debit card, an ATM card and credit card. It is important to understand the differences so that you can choose the correct card for your needs. A debit card is a card that is linked to your checking account. You can use it anywhere that a credit card is accepted. This allows you to access your account at different merchants throughout town. You can also use it at an ATM. It will take the money directly out of your checking out. Debit cards are associated with one of the major credit card companies and will usually have a Visa or MasterCard logo on them. You will receive a PIN to allow you to use the card at the store or ATMs. How a Debit Card Works? When you use your debit card, the merchant will place a hold on your account for the amount of money of your transaction. Your bank may show you the spending transactions on your account. These are the holds put in by the merchants. The merchants then complete the transaction by submitting their transactions and then the money is taken from your account and shows up in your cleared transactions. Some merchants may take longer to file the transactions, and you may have a transaction listed as pending for a few days. If you use your debit card at a hotel or for a car rental, the company may put a larger hold on the account to cover extra costs that you may accrue. It is important to be aware of this so that you do not run into a situation in which your card may be declined because of the hold. Be sure to have additional money in your account if you use it for a hotel or a care rental. Debit Cards Even though debit cards have become widely used, many people are unfamiliar with their advantages and disadvantages. Debit cards look like credit cards, but function like cash or personal checks. Debit cards can function in two ways: Like an ATM card for immediate withdrawals of cash Like a check when buying an item. The money used to pay for the transaction is usually deducted from your account within a day or two depending on when the retailer presents the transaction for payment. Advantages of a Debit Card Easy to obtain. Once you open an account most institutions will issue you a debit card upon request. Convenience. Purchases can be made using a chip-enabled terminal or by swiping the card rather than filling out a paper check. Safety. You don't have to carry cash or a checkbook. Readily accepted. When out of town (or out of the country), debit cards are usually widely accepted (make sure to tell your financial institution you’re leaving your city; to not have an interruption in service). Disadvantages of a Debit Card No grace period. Unlike a credit card, a debit card uses funds directly from your checking account. A credit card allows you to borrow funds on credit, leaving disposable cash in your account. Check book balancing. Balancing your account may be difficult unless you record every debit card transaction. Less protection. Most financial institutions will try and protect their customer from debit card fraud. However, a customer could potentially be liable for up to $500 on fraudulent debit card transactions compared with only $0 on credit cards. Be sure to check with your financial institution to learn the details. Fees. Using your debit card for ATM transactions may be costly if the ATM is not affiliated with your institution.