22-05-2014, 11:59 AM
Debit Card
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Meaning of Debit Card
A debit card (also known as a bank card or check card) is a plastic payment card that provides the cardholder electronic access to his or her bank account(s) at a financial institution. Some cards have a stored value with which a payment is made, while most relay a message to the cardholder's bank to withdraw funds from a payee's designated bank account. The card, where accepted, can be used instead of cash when making purchases. In some cases, the primary account number is assigned exclusively for use on the Internet and there is no physical card.
In many countries, the use of debit cards has become so widespread that their volume has overtaken or entirely replaced cheques and, in some instances, cash transactions. The development of debit cards, unlike credit cards and charge cards, has generally been country specific resulting in a number of different systems around the world, which were often incompatible. Since the mid-2000s, a number of initiatives have allowed debit cards issued in one country to be used in other countries and allowed their use for internet and phone purchases.
Unlike credit and charge cards, payments using a debit card are immediately transferred from the cardholder's designated bank account, instead of them paying the money back at a later date.
Debit cards usually also allow for instant withdrawal of cash, acting as the ATM card for withdrawing cash. Merchants may also offer cashback facilities to customers, where a customer can withdraw cash along with their purchase.
Definition of 'Debit Card'
An electronic card issued by a bank which allows bank clients access to their account to withdraw cash or pay for goods and services. This removes the need for bank clients to go to the bank to remove cash from their account as they can now just go to an ATM or pay electronically at merchant locations. This type of card, as a form of payment, also removes the need for checks as the debit card immediately transfers money from the client's account to the business account
Importance of Debit Cards
Debit cards are the cards that the person used that are attached to their checking account. Basically the person is using their own money in the transaction. The debit card works as a check without having to worry about the filling out of the check and waiting for the check to go through the bank and be cashed. The debit card is going to withdraw the money much faster. Therefore, those that have a problem with controlling their money, then they should consider a debit card since it is going to help the person to keep control of their finances a bit better. Some debit cards are going to charge the person for using their own money though, which is one of the reasons that so many people do not like the debit cards that they are issued. However, they are much easier to replace than if you were to lose money.
So, which is the best option for a person to have? For those every day purchases, using a debit card is the best option since you do not want to find yourself having to pay interest on a simple purchase of coffee during the week. However, if you urea needing to buy bigger things that are more expensive, then a credit card could come in handy since it will allow you to make payments on the item that you need now.
Important Information About Debit Cards and Overdraft Fees
Learn more about bank overdrafts and how to avoid the fees
Bank overdrafts occur and an overdraft fee is charged to you when a debit transaction (for example, a check, ATM withdrawal or debit card purchase) exceeds the available balance in your account and the bank still approves the transaction. As a checking account customer, you know how important it is to keep track of your balances to avoid the inconvenience and expense of overdrafts and accompanying fees. Learn more about overdraft fees and how to avoid them with this helpful guide.
What is an available balance?
The available balance is the amount of money in your account, minus any holds (such as outstanding debit card authorizations) and deposits that are not yet available due to the bank's funds availability policy. It does not include checks you've written that have not yet cleared, pending online bill pay transactions, or pre-scheduled debits (e.g. health club dues automatically debited from your account at a certain time each month).
Your available balance can fluctuate during the day as it is updated to reflect transactions you make, such as cash deposits, direct deposits, account transfers, withdrawals and debit card purchases. You can determine your available balance at the ATM, by phone or by accessing your account online or with mobile banking.
What is an outstanding debit card authorization?
An outstanding debit card authorization is the amount immediately deducted from your available balance while the bank waits for the final settlement request from the merchant, which can take several days. A final settlement request is an instruction from the merchant to the bank to deduct the exact amount of your final purchase. It follows after the debit card authorization request and completes the transaction. While the majority of transactions are settled within one business day, the actual timing rests with the merchant and is out of the bank’s control.
Keep in mind, until the final settlement, the outstanding authorization amount may be larger or smaller than your actual purchase amount. In some cases when final settlement is delayed, the outstanding authorization is released, which causes your available balance to appear larger than you might otherwise expect.
How and when are transactions deducted from my account?
At Bank of the Ozarks, we do not process your transactions in the order that you make them or when we receive them. Rather, we post them based on the transaction type, then by either serial number or amount. Specifically, our posting order is (1) automated, internet and voice banking, and wire transactions, posted from smallest amount to largest amount; (2) ATM/debit card transactions posted from smallest amount to largest amount; (3) ACH debit transactions posted in serial number order if possible, otherwise posted from smallest amount to largest amount; (4) checks presented in person posted in serial number order; and (5) other checks posted in serial number order. Bill payments made through online banking may be completed by check or by ACH.
A Clear Shift in Consumer Spending Preferences
Debit cards are becoming an increasingly important component of the average consumer’s spending pattern. According to the most recent data from the Federal Reserve, more consumers are continuing to shift away from writing checks. As recently as 2003, 45.3% of all non-cash transactions were still completed using checks. However, in just three years this percentage fell to 32.8%. As consumers move away from checks, other methods of payment have benefitted from this shift in trends.
One of the key areas of growth has been in debit signature and PIN transactions, which together accounted for 27.2% of all non-cash transactions in 2006. This is up from just 14.5% three years prior.