What is a Debit Card? A Simple Explanation for Kids, Teens and Beginners

Part 1: What is a Debit Card, How Does a Debit Card Work

What is a Debit Card? A Simple Explanation for Beginners

Part 2: Pros and Cons of Debit Cards, Should You Use a Debit Card

Should YOU use a debit card? A Simple Explanation for Beginners

Introduction to Debit Card for Kids and Teens

This video explains the concept of a debit card in a simple, concise way for kids and beginners. It could be used by kids & teens to learn about debit cards, or used as a money & personal finance resource by parents and teachers as part of a Financial Literacy course or K-12 curriculum.

Debit Card for Kids Teens and Beginners - ATM Withdrawals
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Suitable for students from grade levels:

  • Kindergarten
  • Elementary School
  • Middle School
  • High School

The topics covered are:

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What is a Debit Card - Infographic
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Infographic: Click Here to Download


What is a debit card?

A debit card, also called a bank card, is a plastic or metal card that is used to make purchases in store or online.

You can also use a debit card to pay bills, withdraw cash from ATMs, and more.

Unlike a credit card, a debit card takes money directly from your checking account and is issued by the bank or credit union where you have an account.

How does a debit card work?

When you make a purchase using a debit card, you swipe, tap or insert the debit card at the payment terminal just like a credit card. You may need to enter a PIN (or Personal Identification Number) in some places to verify your identity. 

Debit Card for Kids Teens and Beginners - How does a debit card work
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Once your bank has authorized the transaction, the money goes directly from your checking account to the merchant.

If there’s enough money in the account to cover the purchase, it’ll go through without any problems. However, if there isn’t enough money, one of two things will happen.

If you have overdraft protectiona, your bank will allow the transaction to go through by offering a loan to cover the difference, and then charge you an overdraft fee.

If not, your purchase will simply be declined and not go through.

Although most debit cards don’t have annual fees, they may charge other fees like ATM transaction fee when you withdraw money from an ATM of a different bank, insufficient funds fee when you try to spend more than your bank account’s balance, card replacement fee if your debit card is lost, stolen or damaged as well as foreign transaction fee when you use your card in a foreign country.

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What are the advantages of a debit card?

The biggest advantage of using a debit card is that it isn’t easy to overspend. Unlike a credit card where you take on a short term loan, you can only spend money you actually have with a debit card.

For the same reason, it is nearly impossible to rack up debt from using a debit card.

In addition, debit cards are accepted pretty much everywhere, making them a very safe and convenient choice as you don’t have to carry any cash.

Debit cards also help you keep track of your spending. And they are very easy to obtain even with poor credit as you usually get one automatically just by opening a checking account.

Debit cards can also be used to withdraw or deposit cash at ATMs and for bill payments. They can be added to digital wallets as they work well with mobile payment apps like Apple Pay, Samsung Pay, and Google Pay.

They can also be used to send money to family and friends using peer-to-peer money transfer apps like Venmo and Zelle.

Some debit cards have started offering rewards like cash back on purchases, just like credit cards.

What are the disadvantages of a debit card?

The amount you can spend is limited to your bank balance. While this helps with not getting into debt, a debit card will not let you finance a large purchase and pay it off over time. 

Debit Card for Kids Teens and Beginners - Advantages and disadvantages
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Although most debit cards don’t have annual fees, they may charge other fees like overdraft fee, ATM transaction fee, insufficient funds fee, card replacement fee or foreign transaction fee.

While some debit cards have started offering rewards, they are not nearly as good as the rewards offered by credit cards.  

Debit cards also don’t offer as much fraud protection as credit cards. Since your bank account is exposed, if your debit card is lost or stolen, it is a huge risk as the thief can drain your entire bank balance!

Lastly, you cannot build your credit history or improve your credit score by using a debit card. Well this also means you cannot worsen your credit by using a debit card.

Should I use a debit card?

If you are prone to overspending or can’t get a credit card, a debit card is a good choice since it’s very easy to get one and it’s difficult to spend more money than you have.

However, if you are a responsible spender, credit cards’ perks, credit building potential, and advanced fraud protection make them a better choice.


What is a Debit Card: Old Version

What is a Debit Card? A Simple Explanation for Kids and Beginners
What is a Debit Card - A Simple Explanation for Kids Teens and Beginners
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You’ve already told me what a Credit Card is. But…

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What is a debit card?

Well, a debit card is a card like a Credit Card that is linked to your bank account.

You can use it to make purchases, and the money that is used to make the purchases comes from the bank account.

But is there any other use of a debit card, other than those?

Yes, you could use a debit card for ATM withdrawals, which means you can use it to take money out of an ATM.

You can also link one debit card to multiple checking accounts or savings accounts.

What if there is not enough money in the account?

But what if there is not enough money in the checking or savings account to make my purchase or ATM withdrawal?

Then, your purchase would be declined or you would not be able to take the money out of the ATM. You can only spend as much money that’s available in the checking or savings account.

Are there any charges or fees?

Usually, there are no annual fees or charges for purchases that you make using your debit card.

But there might be a small charge for withdrawing money from other banks’ ATMs – not the bank that issues it.

Ok.

But can I use my debit card outside my own country?

Yes, you can. But there may be charges, plus you might get a bad exchange rate, which means that you would end up paying a little more money than you meant to pay.

That’s not good!

How many debit cards can I have?

There is no limit to the amount of debit cards you can have, but you should make sure you have a controllable amount because otherwise if one gets lost or stolen, that would be bad for you!

Yeah, that would be bad!

Where can I get a debit card from?

A bank issues a debit card when you open a checking or savings account. That debit card would be linked to that checking or savings account.

Ok.

What is a Debit Card for Kids Teens and Beginners - A Simple Explanation
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But can I choose what debit card I get?

No, the bank provides a debit card. But some banks will let you customize the debit card design, or what image or photo is printed on the front of the debit card.

Whoa… That’s a lot of information about a debit card! Thank you very much Wall Street Willy.

You’re welcome Sooper Cooper!

Remember, finance is your friend!


Video Featured in the Below Financial Literacy Course for Kids & Teens


Download Transcript: Ideal for Use by Teachers in their Lesson Plan to Teach Kids & Teens


Podcast: What is a Debit Card?

What is a Debit Card and Should You Use It
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