A beginner’s guide to how debit cards work

More and more places are going cashless, and debit cards are one of the easiest ways to pay without cash. A quick swipe, tap, or insert, and the money comes right out of your bank account. Why use a debit card vs. a credit card or a cash app? Our beginner’s guide walks you through the basics of how debit cards work, plus the pros and cons. 

How does a debit card work?

Debit cards give you direct access to money in your bank account. When you open a bank account, most banks offer a debit card to go with the account. If you say yes, they’ll mail it, usually in 7-10 days. Once you activate it, you can use it right away.

You can use them to buy things in stores or online, or to withdraw cash from an ATM. Each time you use your debit card, the money you spend comes directly out of your available balance.

Here’s how to use a debit card for purchases:

• At checkout, you insert, tap, or swipe your card (or enter your card information if you're online).

• The payment system contacts your bank to ask for approval.

• If the money is available, the transaction is approved.

• The purchase amount is then withdrawn from your account.

When you activate a debit card, you’ll also get a PIN (a Personal Identification Number). Typically a four-digit number, the PIN serves as an additional security measure to help verify your identity during specific electronic transactions. 

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Note: The PIN is often included with the debit card and is specific to the card itself. It is not the same as the password you create to access an ATM or log in to your account online.

Debit cards vs. credit cards

Debit cards and credit cards look similar, but they function differently. 

Debit cards

• Use your own money

• Pull funds directly from your bank account

• No interest, no borrowing

• Helpful for staying on budget

Credit cards

• Use borrowed money from the credit card company

• You pay the balance later (plus interest if you don’t pay in full)

• Helps build credit when used responsibly

• Offers more protection in case of fraud

See this guide to learn more about the difference between debit and credit cards.

Ways to use a debit card 

With a debit card, you’re paying with money that’s already in your account. That means there’s no borrowing involved, so there shouldn’t be any interest charges or balances you need to pay off as long as the funds are in your account. 

Here are some real-life ways to use a debit card:

• Retail. Grab tonight’s dinner, insert or tap your debit card at the register, punch in your PIN, and the cost comes straight out of checking. Many stores even let you ask for “cash back,” so you can skip the ATM fee and leave with a twenty.

• ATM cash. Need bills for those Girl Scout cookies? Pop the card into an in-network ATM, enter your PIN, and walk away with the cash (and maybe a small ATM fee) immediately deducted from your balance.

• Mobile wallet. Add your debit card to Apple Pay or Google Pay. Next time you're at the coffee shop or pharmacy, just hover your phone or watch over the contactless symbol, and you’re done.

One quick note: Big-ticket deposits can be tricky with debit cards. Hotels and car rentals sometimes require putting a big hold (anywhere from about $50 to $200+) on a card for incidentals. That money is frozen for several days, so a credit card is usually the better choice.

Can kids and teens have debit cards?

You must be 18 to get a debit or credit card independently. But kids and teens under 18 can get one with a parent’s help.

Greenlight offers debit cards for kids* with parental oversight. You can set spending limits, track where and when money is used, and even automate allowance or tie it to chores. Your kids get hands-on experience with saving, spending, and budgeting in a safe environment.

Tips for using a debit card for kids and teens

Learning how to use a debit card can also be an effective way to teach good money habits. Here are a few tips to help your kids start strong:

• Talk about tradeoffs. Help them think through spending decisions. “If I buy this now, will I have enough for what I need later?”

• Set spending limits. Use the app to create limits that match your child’s age and needs.

• Encourage saving first. Before they spend, discuss setting money aside for larger goals.

• Use real examples. Show them how to check their balance and walk through a recent purchase together.

• Stick to needs vs. wants. Especially with impulse buys, giving them time to think can make a big difference.

With the Greenlight debit card, kids and teens get hands-on money experience — and parents stay in control every step of the way.

FAQs

What’s the difference between a debit card and a credit card?

A debit card enables you to spend or withdraw money you already have. Credit cards are a way to spend money you’ll have to pay back later, and if you wait too long, interest adds up.

Can I get cash back at a store with a debit card?

If the store allows it, yes, you can ask for cash back at checkout when you run your card as “debit” and enter your PIN.

What if I don’t have enough money in my account?

Your purchase might be declined. Some banks offer overdraft coverage, but that could lead to extra fees, so it’s better to know your checking account balance ahead of time.

What should I do if my debit card gets lost or stolen?

Call your bank right away. They’ll cancel the card, block any new charges, and send you a replacement.

Want money-savvy kids? Introduce them to smart money habits through hands-on learning and real-world practice with Greenlight. Try Greenlight, one month, risk-free.†

*The Greenlight® prepaid card is issued by Community Federal Savings Bank, member FDIC, pursuant to license by Mastercard International.