4 Surprising Facts You Didn’t Know About the Debit Card You’re Always Using

Here’s one of those money things you feel like you’re supposed to understand, so you never ask the question…

What the heck is the difference between debit and credit cards?

Some of you might have no idea. Some of you might think it’s obvious. Wherever you stand, I bet there are a few things you don’t know about how your debit card affects your bank account.

If you have a checking account, you probably carry a debit card in your wallet. It’s probably the same shape and size as a credit card, and it probably even bears the Visa or Mastercard logo on the front.

But it’s significantly different, and lots of people don’t know exactly how.

Here are four facts you might not know about those powerful pieces of plastic.

1. Credit and Debit Cards: Not the Same Thing

Let’s start with some basic definitions.

Laura Adams of the Money Girl podcast defines credit and debit cards:

• A credit card allows you to make purchases using borrowed money that you have to pay back with interest over time.
• A debit card allows you to make purchases using your own money that’s linked to a bank checking or savings account.

In other words: When you pay with a debit card, it automatically deducts the money from your checking account.

When you pay with a credit card, you’ll get a bill at the end of the month. If you don’t pay it in full, the charge sits on your account and accumulates interest until you pay it off.

Here are some examples of different types of credit and debit cards:

• For freelance work, I receive payment via a prepaid Payoneer Mastercard debit card. I don’t have an associated bank account — the client just loads my payment on to the card through Payoneer, and I can use it for purchases or ATM withdrawals.
• My Aspiration account comes with a Mastercard debit card that I can use to make purchases and withdraw money from ATMs anywhere in the world. The money comes directly out of my checking account, and Aspiration refunds ATM fees each month.
• An online Chime checking account comes with a Visa debit card that you can use to make purchases and withdraw money from ATMs. The money comes out of your account, and you can enroll in automatic savings, to round up purchases and pad your connected savings account.
• The Chase Freedom Unlimited credit card. Its claim to fame? You’ll earn an unlimited 1.5% cash back on all your purchases. Plus, if you spend $500 in your first three months of opening the card (hi, groceries), you’ll pocket a $150 bonus.*

2. Your Card Might Say “Visa,” but It’s Not a Credit Card

Here’s what baffles me. I don’t have a credit card, but I do have a debit card linked to each of my checking accounts. And all of my debit cards have a Visa or Mastercard logo on them.

What do those companies have to do with me and my bank accounts?

Mastercard and Visa are like the go-betweens that process transactions for banks. Businesses that accept them as payment are part of their respective networks.

Say I make a purchase at Publix, my local grocery store. I use my debit card from my Aspiration account. Publix manages its money at, say, Anytown Bank Corp.

I swipe my card, and Mastercard’s job is to let Aspiration and Anytown Bank Corp. know about the transaction. So my money is debited from my account and credited to Publix’s account.

That’s the kindergarten version of the explanation. Picture me in a dinosaur costume on set with a mini town. That’s as far as I want to go into this web of finances floating around the ether.

3. Processing As “Credit” — Nope, Still Not a Credit Card

Here’s where the distinction becomes hazy: What does it mean to run a debit card transaction “as credit”?

When you make a purchase with your debit card, the cashier — or the machine — usually offers the option to run it as “debit or credit.” Here’s the gist:

• If you run the transaction as debit, you’ll enter a PIN to confirm it.
• If you run the transaction as credit, you’ll sign to confirm it.

What does the difference mean for your wallet?

Regardless of which way you process the transaction, the money you spend on your debit card will come out of your checking account. You can’t actually use a debit card to buy something now and pay later, like a credit card.

The major difference you’ll notice is in security.

As Adams explains, your debit or ATM card is protected under the Electronic Fund Transfer Act (EFTA). Under this law, your liability for fraudulent charges depends on how soon you report it.

• Report within two business days, and you’re responsible for up to $50 in fraudulent charges.
• Report within 60 days, and you’re responsible for up to $500.
• If you still have the card in your possession, you’re not liable for anything as long as you report it within 60 days after you receive a bank statement.
• If you wait more than 60 days to report the charges, your liability is unlimited, including overdraft fees or other penalties from your bank.

That’s why your debit card comes with a personal identification number (PIN). A thief might snatch your card or number, but if they don’t know your PIN, they can’t complete a purchase at the register (assuming the cashier does their job and checks ID and requires a signature for a non-PIN purchase).

Credit cards, on the other hand, are protected under a law called the Fair Credit Billing Act (FCBA), which says you’re never responsible for more than $50 in fraudulent charges.

Some people think FCBA protections extend to a debit card when processed as credit — that’s not true.

However, processing your debit card as credit could offer additional protections under Visa and Mastercard’s policies.

Visa debit cards are extended the security of Visa’s Zero Liability Policy. The company’s site says, “If your Visa Debit card is lost or stolen and fraudulent activity occurs, you are protected by Visa’s Zero Liability Policy. That means 100% protection for you.”

It adds, however, “Visa’s Zero Liability policy does not apply to certain commercial card and anonymous prepaid card transactions or transactions not processed by Visa.”

That last part means Visa doesn’t have your back if you process the transaction as debit. So if a thief gets hold of your card or card number and your PIN, they could run up charges on the card that you’ll be liable to pay under the terms of the EFTA.

Mastercard protects you from fraudulent debit purchases with similar Zero Liability Protection.

4. Credit Transactions are More Expensive for the Merchant

One other major difference between running your card as debit versus credit is how much it costs the business. Each transaction comes with a fee that goes to the card issuer, the financial institution and others.

Those fees tend to be higher for credit card transactions, especially those with great rewards. If you want to help your favorite local merchant save money, choose debit to reduce their fees — or pay in cash.

*Chase Disclaimer

Annual Rewards amounts will change based on the amounts you enter. The monthly spending category names and definitions may vary among issuers, and categories may not align one-to-one.

The information for the Chase Freedom Unlimited card has been collected independently by The Penny Hoarder. Opinions expressed here are the author’s alone, not those of the credit card issuer, and have not been reviewed, approved or otherwise endorsed by the credit card issuer. The Penny Hoarder is a partner of Credible.

*Banking services and debit card provided by The Bancorp Bank N.A. or Stride Bank, N.A., Members FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. Round Ups automatically round up debit card purchases to the nearest dollar and transfer the round up from your Chime Checking Account to your savings account.

Dana Sitar ([email protected]) is a senior writer/newsletter editor at The Penny Hoarder. Say hi and tell her a good joke on Twitter @danasitar.

Chime is a financial technology company, not a bank. Banking services provided by The Bancorp Bank, N.A. or Stride Bank, N.A., Members FDIC. The Chime Visa® Debit Card is issued by The Bancorp Bank, N.A. or Stride Bank, N.A. pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted. The secured Chime Visa® Credit Card is issued by The Bancorp Bank, N.A. or Stride Bank, N.A. pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa credit cards are accepted. Please see the back of your Card for its issuing bank.

MyPay® line of credit provided by The Bancorp Bank, N.A. or Stride Bank, N.A. MyPay services provided by Chime Capital, LLC (NMLS ID 2316451).

Chime is recommended by more of its users in the 2024 Qualtrics® NPS study when compared to top national banks and select fintechs. THE #1 MOST LOVED BANKING APP is a Registered Trademark of Chime Financial, Inc.

* Terms apply. Limited time only, must open the new account and complete qualifying activities to earn 3 individual rewards, up to a max of $350.00, as described at https://www.chime.com/policies/newmemberofferv3.

1 Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.

2 Out-of-network ATM withdrawal and over the counter advance fees may apply except at FCTI® ATMs in a 7-Eleven® or Speedway, or any Allpoint® or Visa® Plus Alliance ATM participating in the Allpoint network.

3 SpotMe® on Credit is an optional, no interest/no fee overdraft line of credit tied to the Secured Deposit Account. SpotMe on Debit is an optional, no fee service attached to your Chime Checking Account (individually or collectively, “SpotMe”). Eligibility for SpotMe requires $200 or more in qualifying direct deposits to your Chime Checking Account each month.

Qualifying members will be allowed to overdraw their Chime Checking Account and/or their Secured Deposit Account up to $20 in total, but may be later eligible for a higher combined limit of up to $200 or more based on member’s Chime account history, direct deposit frequency and amount, spending activity and other risk-based factors. Your SpotMe Limit will be displayed to you within the Chime mobile app. You will receive notice of any changes to your SpotMe Limit. SpotMe for Credit and SpotMe on Debit share a single SpotMe limit. Your SpotMe Limit may change at any time, at Chime or its banking partners’ discretion. Although there are no overdraft fees, there may be out-of-network or third-party fees associated with ATM transactions or OTC cash withdrawal fees at retailers. SpotMe won’t cover non-card transactions, including ACH transfers, Pay Anyone transfers, or Chime Checkbook transactions. SpotMe Terms and Conditions.

4 With a qualifying direct deposit, earn 1.5% cash back on eligible secured Chime Visa® Credit Card purchases. Please refer to the Secured Chime Visa® Credit Card – Cash Rewards Program Addendum for details and more information on rotating cash back categories.

5 On-time payment history may have a positive impact on your credit score. Late payment may negatively impact your credit score. Chime will report your activities to Transunion®, Experian®, and Equifax®. Impact on your credit may vary, as Credit scores are independently determined by credit bureaus based on a number of factors including the financial decisions you make with other financial services organizations.

6 Out-of-network ATM withdrawal and OTC advance fees may apply. View The Bancorp agreement or Stride agreement for details; see back of card for issuer.

7 Money added to Chime Card™ will be held in a secured deposit account as collateral for your Chime Card, and you can spend up to this amount. You can use money deposited in your Secured Deposit Account to pay off your charges at the end of every month.

8 You must notify your financial institution immediately of any unauthorized use. For specific restrictions, limitations and other details, please consult your issuer.

9 To be eligible for Chime+™ status, you must receive a qualifying direct deposit to your Chime Checking Account in the preceding 34 days. Certain products marketed as Chime+ benefits have additional eligibility requirements. While some Chime+ benefits may have associated fees, none of these fees are mandatory to access Chime+ benefits or to maintain Chime+ status. See Chime+ Terms and Conditions for details.

10 To be eligible for MyPay, you must receive qualifying direct deposits to your Chime Checking Account in the preceding 36 days as set forth in the MyPay Agreement. A qualifying direct deposit is a deposit from an employer, payroll provider, gig economy payer, government benefits payer, or other permitted source of income by Automated Clearing House (“ACH”) or Original Credit Transaction (“OCT”). Your MyPay Credit Limit and Maximum Available Advance may change at any time. MyPay is a line of credit and available limits are based on estimated income and risk-based criteria. Eligible members may be offered a $20 – $500 Credit Limit per pay period. Your Credit Limit and Maximum Available Advance will be displayed to you within the Chime app. MyPay is currently only available to eligible Chime members in certain states. Other restrictions may apply. See Bancorp MyPay Agreement or Stride MyPay Agreement for details.

11 Top three national bank ranking according to the Federal Reserve Statistical Release based on domestic assets; number of ATMs self-reported by Chase, Bank of America and Wells Fargo – June 2025.

12 To apply for a Chime Card, you must also open a Chime Checking Account.

13 Chime Visa® Credit Card holders – Deposits and debit refunds go to your Checking Account, then transfer to your Chime Card Secured Deposit Account – other than Chime Card cash deposits at retailers, which go to your Chime Card Account, then transfer to your Secured Deposit Account. Funds are moved from your Secured Deposit Account to your Checking Account to facilitate outbound transfers and debit purchases. Your Available balance is the money you can spend with your Chime Card or Checking Account. See account agreements and statements for details.

14 Chime will report the following activities, as applicable, to TransUnion®, Experian®, and Equifax®: amount past due; payment status of the last paid-off balance; how long you’ve had your card; current statement balance; last balance payment date; and highest balance before paying it off.