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If you own a checking account, there is a strong likelihood that you also have a debit card. Do you understand how a debit card works? Understanding the answers to the questions below will help you use your card properly and save money!

Q: What type of card allows you make purchases without using credit and also withdraw money from an ATM?
A: Most commonly known as a debit card. But also known as check cards, express checking cards and enhanced ATM cards.

Q: Debit cards offer extreme convenience. But do you really understand how they work?
A: A debit card operates in a manner like an electronic checkbook. As soon as you sign the sales receipt, the money is withdrawn from your account. Debit cards offer no pay-later option like credit cards do.

Q: There are two types of debit cards: deferred and direct debit cards. What is the difference between the two?
A: A direct debit card requires user to enter a PIN (personal identification number). With this type of card, purchases are directly removed from your account. Also, most merchants accept this type of card.

On the other hand, a deferred debit card is signature-based. There cards have a MasterCard or Visa logo and are accepted where ever they are. Simply give the cashier your card and sign the receipt. The sale amount is deducted from your account within two or three days.

Q: When you use your debit card at the checkout, you will often be asked if you want to pay with 'credit' or 'debit'. Which should you choose?
A: Either one can be used. But when you choose debit, there is a strong likelihood that you are going to be charged a small fee by your bank for the making the purchase. On the contrary, when you select credit, you will not.

Q: With the increase in identity theft crimes, which type of debit card provides the most optimal security against some making fraudulent charges with your money?
A: Consumer experts advise people to utilize PIN-based, direct debit cards only. A potential identity thief is going to need to have your personal identification number in order to complete a purchase. Anyone can pick up and use a signature-based debit card. More often than not, sales clerks don't even check to see if signatures match the one of the card. Even so, they are not handwriting experts! Read about Electronic Fund Transfer Act to learn what rights you have regarding fraudulent charges made on your account.

Q: Suppose you need money for a financial emergency, like a car repair. What would your best option be for making a payment?
A: Your best option is going to be a credit card. When making large ticket purchases with a credit card, you have the right under the Fair Credit Billing Act to withhold payment in the event that you are not satisfied with the quality of purchase or work. On the other hand, purchases made with a debit card are the same as paying with cash or a personal check. You are going to be trapped trying to work out the dispute with the merchant on your own.

Q: When shopping on the Internet, should you use a debit or credit card?
A: Using a debit card for online shopping will not necessarily result in someone emptying your bank account, but credit card purchases provide you with more legal protection. Make an order with a debit card and your protection is limited -- and only if you identify the problem fast.



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