Debit Card Definition and Legal Meaning
On this page, you'll find the legal definition and meaning of Debit Card, written in plain English, along with examples of how it is used.
What is Debit Card?
“A bank issued card that can be used in lieu of a check to pay for goods and services as well as used as an ATM card. At the time of purchase, debit cards directly withdraw money from the user’s checking account.
History and Meaning of Debit Card
Debit cards were first introduced in the 1970s as an alternative to writing checks or carrying cash. Initially, they were only accepted at ATMs for cash withdrawals, but later expanded to include point-of-sale transactions. Debit cards are similar to credit cards, but instead of borrowing money, the funds are immediately transferred from the user's bank account to the merchant.
Examples of Debit Card
- A customer uses their debit card to pay for groceries at the supermarket.
- A college student withdraws cash from an ATM using their debit card.
- A small business owner pays for office supplies with a debit card.
- A traveler uses their debit card to book a hotel room online.
- A parent sets up a prepaid debit card for their teenager to use for shopping.
Legal Terms Similar to Debit Card
- Credit card - A card issued by a bank or financial institution that allows the user to borrow money to make purchases.
- ATM card - A card used to withdraw cash from an ATM, but not accepted for point-of-sale transactions.
- Prepaid card - A card that is funded in advance and can be used for purchases until the balance runs out.