Can You Use an ATM Card for Purchases and Online Payment?

Pay With Plastic: Debit vs. ATM Cards

Retail placard with Visa, MasterCard, Discover, and American Express logos
••• PT Money

When you open a checking account, your bank typically furnishes you with a free ATM card that may be used to make cash withdrawals and deposits, transfer funds between accounts and check account balances. Some ATM cards also function as debit cards, which may be used to make purchases both online and at retail establishments. Such cards have visible Visa, Mastercard, Discover, or American Express logos.

Debit cards can be used in place of credit cards except to pay for rental cars and hotel stays, where the bill totals can only be calculated after you return your car or check out of your room. Consequently, billers either require a credit card or they may place an authorization hold on your account, which can tie up your checking account's funds.

Comparing and Contrasting Different Types of Cards

A simple comparison of the different cards available are as follows:

ATM cards are the simplest cards, which generally may be used only at ATMs for basic banking transactions.

Debit cards, also known as check cards, do everything ATM cards do but also let you spend from your checking account anywhere that cards are accepted.

Credit cards let you borrow from your credit card issuer. Funds do not come directly out of your checking account. Instead, you accrue a loan balance which you must pay off at a later date. It’s wise practice to pay off the entire balance every month in order to avoid hefty interest charges. For everyday spending, credit cards are safer than debit cards for the following reasons:

  1. If somebody steals your debit card or obtains your card number, thieves can immediately drain your checking account, making it potentially difficult for you to pay bills.
  2. Credit cards offer superior consumer protection against fraud by limiting your losses to $50, under federal law, for unauthorized charges. While most debit cards likewise protect against fraud and errors, federal law is not as generous with debit card loss limits.

But credit cards also have drawbacks. Chief among them: They may tempt you to spend beyond your means. For more details, learn about the pros and cons of spending with debit and credit cards.

Prepaid debit cards are similar to standard debit cards, but instead of pulling funds from a checking account you “load” funds into your account with the card issuer. This may be done either by setting up direct deposit, adding funds with an electronic transfer or an in-person deposit, or using a mobile check deposit. You can then spend from the card until you’ve used up the money you've previously loaded. It is relatively easy to qualify for prepaid cards, making them an attractive option for those who have experienced difficulty opening a bank account.

On the downside, prepaid debit cards can be expensive, and they’re not as useful as fully functioning debit cards.