Debit cards are a convenient way to pay for the things you need. But with so many different types of debit cards available, it can be hard to figure out which one is right. We explain the different types of debit cards and help you choose the one that's best for your child.
What is a debit card?
A debit card is a plastic card that gives you access to your bank account funds. Debit cards can be used to withdraw cash, make purchases, or pay bills.
When you use a debit card, the money is deducted from the account balance immediately. Debit cards are similar to credit cards, but there is no loan involved. The cardholder spends only what is available in their account unless they have arranged for an overdraft.
Debit cards are part of the electronic payments system and can be used for point-of-sale purchases, ATM withdrawals, and online shopping. Many banks and financial institutions offer debit cards to their customers as an alternative to cash or checks. Some businesses also offer debit cards to their employees as a way to access their earned wages.
How do debit cards work?
Debit cards work by linking your bank account to the card. When you use it, the money is transferred from your bank account to the merchant's account.
Debit cards can be used anywhere credit cards are accepted and they usually have a Visa or MasterCard logo on them. Debit cards allow you to access money stored in different accounts like a checking account, money market account, prepaid debit account, or even a government agency-managed account. When making a purchase, the cardholder enters their PIN (Personal Identification Number) into a keypad, authorizing the transaction.
Some debit cards now have contactless technology, which allows the cardholder to tap their card on a reader to pay for purchases. Most debit cards also have ATM access, so you can withdraw cash from your account at any time. In most situations, you can only spend or withdraw amounts up to the balance available in the connected account, although certain financial institutions might let you overdraw your account, for a fee.
Different types of debit cards
There are different types of debit cards, each with its own set of features and benefits. Here are some of the most common types of debit cards:
Standard debit card
The most basic type of debit card. It can be used to withdraw cash, make purchases, or pay bills. Most standard debit cards have a limited daily spending limit and can be used at most ATM machines and retailers.
Pros:
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Can be used anywhere that accepts major credit cards
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No need to carry cash
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Can track spending easily
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After each transaction, the purchase price is instantly deducted from your checking account (so you don’t need to make any payments when the account statement arrives at the end of the month)
Cons:
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May have fees for certain transactions, such as international transactions or ATM withdrawals
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May have a limit on the amount of money that can be spent in a day
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Doesn’t let you build credit history
Prepaid debit card
This is a type of debit card that needs to be loaded with funds before it can be used. They can be used to make purchases or withdraw cash, but cannot be used to overdraft your account. Prepaid debit cards are typically not linked to a bank account and do not offer features such as rewards or credit.
Pros:
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Can be used anywhere that accepts major credit cards
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No need to carry cash
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Can track spending easily
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Can be reloaded with money as needed
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No risk of overspending
Cons:
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May have a limit on the amount of money that can be spent in a day
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Not typically linked to a bank account
ATM card
This is a type of debit card that can be used to withdraw cash from an ATM machine. ATM cards are typically linked to a current account and have a daily spending limit.
Pros:
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Can be used to withdraw cash from ATMs
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Typically linked to a current account
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Protects against fraud by requiring PIN number entry to use
Cons:
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ATM cards are generally limited to a few hundred dollars per day
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May have fees associated with using them
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Need to carry cash
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ATM cards are quite rare these days, with few banks offering them anymore
EMV debit card
EMV debit cards are exactly like standard debit cards, except they include an embedded computer chip. This EMV payment system is a more secure way to pay in the US, with built-in technology to keep your money safe.
Pros:
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Can be used anywhere and in the same way as major debit and credit cards
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Same benefits of a standard debit card with added security technology
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More difficult to forge, hack, or steal information
Cons:
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Same spending limits and fees as a standard debit card
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Limited availability
Gift cards
While gift cards may not typically come to mind in your list of types of debit cards, they work very similarly. Instead of connecting to an account owned by a specific person, they are loaded with a certain amount of money tied to the card itself. Some gift cards even allow you to reload them like a prepaid debit card.
Pros:
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Benefits of a debit card without opening a bank account
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Alternative to carrying cash
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Can set aside money for specific stores or purchases
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Great debit card practice for children
Cons:
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Most gift cards are only redeemable at specific stores
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Less security and fewer protections
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If you lose a gift card, you can’t get your money back
Different debit card issuers
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Visa Debit: The most common type of debit card, which uses the Visa network to process transactions and can be used anywhere that accepts Visa payments.
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Debit Mastercard: A close second to Visa in terms of acceptance, Mastercard also offers a wide range of debit cards.
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Maestro: Operated by Mastercard, Maestro is a debit card service that’s available in 93 countries. Maestro will phase out in 2023, transitioning to Debit Mastercard.
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UnionPay: UnionPay is the largest bank card association in China and can be used to make payments and withdrawals at over 5 million ATMs around the world.
Which type of debit card is best for kids?
The type of debit card that is best for kids depends on their needs and spending habits. If your child plans to use the card primarily for cash withdrawals, then an ATM card is a good option. However, if your child plans to use the card primarily for making purchases at retailers and online, then a standard debit card or prepaid debit card would be a better option. If they have a particular store in mind, consider a gift card. For added security, check if EMV card options are available through your bank.
Your child may feel ready to have their own bank account. A prepaid debit card is a safer option to help them manage their spending and ensure they don't overspend. Many parents use prepaid debit cards for kids under 18 as a way to teach them about responsible spending while letting them manage their own finances in a secure, controlled way. That's why the GoHenry prepaid debit card is such a popular option with parents. Plus, our debit card is available for kids from the age of six, while the lowest debit card age that most US banks offer is 13.
