Billions of debit card transactions are made in the United States each year. But despite the widespread use of debit cards, some people still aren’t sure how they differ from credit cards. If you’re experiencing card confusion, read on to clear up some debit card misconceptions you may have.
Myth 1: Credit cards are more secure than debit cards.
Fact: There’s no difference in security between credit cards and debit cards—the only difference is their funding source. Debit cards are funded by a checking account, and credit cards are funded by a line of credit, which involves an application and approval process. In the event of suspected fraud, the general process for both credit and debit cards is for the cardholder to submit a fraud claim with his/her financial institution. A provisional credit may be given while an investigation occurs, and a decision is made that either confirms fraud (the credit stays in place) or denies the claim (the credit is reversed and removed).
Navy Federal protects their cardholders with their Zero Liability policy. This policy keeps their members, for both debit and credit cardholders, from losing money due to confirmed fraud.
Myth 2: Debit card use affects your credit score.
Fact: Debit cards don’t impact your credit score at all, even if you select “credit” at checkout when using your debit card. Your debit card and checking information isn’t sent to credit bureaus. Generally speaking, credit scores are arrived at using information about your payment history, like if you’ve been delinquent paying bills, the amount of available credit you have on revolving accounts (such as credit cards), the length of your credit history, the types of credit you have open and how much new credit you have.
Myth 3: PIN transactions are safer than credit transactions when you use your debit card.
Fact: There isn’t any difference in security between PIN and credit transactions on your debit card. The only time having a PIN protects you is if your card is lost or stolen and the thief doesn’t know your PIN and chooses that option upon checkout or tries to withdraw money from an ATM.
Myth 4: Your debit card gives you access to 100% of the amount in your checking account all the time.
Fact: Financial institutions impose daily limits on the amount of money you can withdraw from an ATM and at point-of-sale to protect debit card holders from having all their money accessed if a thief gets their card. Daily spending limits are imposed on credit cards, too. In case a person needs more money than the limit allows, he/she can contact their financial institution for a temporary increase.
For example, at Navy Federal Credit Union, the daily limit for purchases using a debit card is $3,000 for all checking accounts except for Flagship Checking, which has a $5,000 limit. The ATM daily limit is $600.
Myth 5: You can’t use your debit card to make small purchases.
Fact: You can use your debit card to cover something as small as a penny! Whether it’s buying a cup of coffee or paying a $0.01 difference when a gift card doesn’t quite cover what you’re buying, you can use your debit card. Debit cards free you from needing to keep cash and change on hand. When you lose cash, it’s a hassle and your only option is to hope someone returns it to you.
How to Get a Debit Card
Don’t have a debit card with Navy Federal yet? Open a checking account with us, and you’ll receive a free Navy Federal Debit Card. You can get a debit card instantly issued at any of our branches worldwide, or you can get one mailed directly to you. Already have a debit card with us? Learn about your card’s features (such as Navy Federal’s Zero Liability protection) by visiting our debit card page.