Debit Cards Outspace Credit Cards

This plastic card looks like a credit card, but it is used to withdraw money from a savings or checking account. When you use a debit card at Automatic Teller Machines or in stores to make purchases, money is immediately withdrawn from your account. You cannot withdraw more money than you have in the account.

A Debit card is a ISO 7810 card which physically resembles a credit card, and, like a credit card, is used as an alternative to cash when making purchases. However, when purchases are made with a debit card, the funds are withdrawn directly from the purchaser's bank account. Debit cards use the same underlying technology as ATMs (bank machines) that dispense cash; authentication may consist of the use of a numeric PIN (personal identification number) known only to the cardholder. PINs can be used only where the POS (point of sale) terminal is properly equipped; in particular, a separate keypad is needed to allow the customer to enter his or her PIN and select the account from which funds should be drawn.

Debit cards, and secured credit cards, are popular among college students who have not yet established a credit history. There are also forms of debit cards (e.g. Visa Buxx) that are purchased by parents for teens as young as 13. The parent retains a great deal of control over the teen's use of the debit or credit cards .

Visa, USA reports that for the first time the number of purchases with debit cards outpaced the purchases made with credit cards. Visa has a good deal of evidence, since it processed 3.04 billion debit card transactions in the first half of this year and "only" 2.96 billion credit card transactions. Visa's study found that consumers had twice as many credit cards as debit cards. However, 60 percent of consumers preferred to carry debit cards rather than a supply of cash, and 48 percent opted for debit cards rather than carry checks.