Debit cards are a common way of paying for things without relying on credit, and can be a useful alternative to cash. Although debit cards aren’t designed for borrowing, that doesn’t mean you can’t get into debt by using one.

In this article we give you more information on debit cards and debt; what debit cards are, the difference between them and credit cards, how people get into debit card debt, and the steps you should take to get back in the black.

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What is a debit card?

Debit cards are similar to credit cards and charge cards, both in appearance and in the way you use them – plastic cards that you can use to make purchases.

The main difference is that, rather than making purchases on credit, debit cards enable you to make purchases using your own money.

Making payments with your debit card uses funds from your own bank account, so you aren’t borrowing any money for the transaction. It’s an alternative to using cash, but with more security, fraud protection, and consumer protection.

You can also use your debit card to get cash from cash machines. Just go to a cash machine, insert your card, enter your PIN, and you can draw cash directly from your bank account.

How do I know if my card is debit or credit?

There are a few key distinctions between debit and credit cards, both physically and in the way they’re issued, that will allow you to tell the difference.

Debit cards are essentially cash cards. Yours will be issued by your bank, and gives you access to the money in your current account or checking account. That means it will carry the name of your bank, and should also say ‘Debit’ somewhere on the right hand side of the card.

Credit cards, on the other hand, allow you to make a purchase on on credit – money you borrow, that comes with interest charges and fees. Credit cards are issued by credit card companies like mastercard, so may carry the name ‘mastercard’ or something similar. You should also be able to see the word ‘Credit’ somewhere on the card itself.

Can you use a debit card with no money in your account?

Because debit cards are a way of giving you access to the money you have in your current account or checking account, you won’t be able to use them unless there’s money in those accounts.

If you try to make a purchase with no money in your current account, your card may be declined, unless you transfer funds from a savings account.

The exception to this is if you have an overdraft. Some banks and debit card providers will offer the consumer an overdraft line, meaning they will let you borrow a certain amount from them and settle the debt later.

If your overdraft line is £15, for example, and your account balance is £15, you can use your debit card to make a £30 purchase, and repay the amount you borrowed from the card provider later.

Can you go into debt with a debit card?

Unlike credit card users, you won’t be able to make high-value card purchases with a debit card unless you have that money in your account already. That doesn’t mean it’s impossible to get into debit card debt.

If you pay for something with your bank card and there isn’t enough money in your account, you’ll go overdrawn. It’s important to note this is different from an overdraft. An overdraft is a pre-agreed amount you can borrow from your provider, with no charges attached.

Being overdrawn means you have spent money you don’t have, without coming to an arrangement with your bank or debit card company. At this point, fees and charges can be added by the card issuer.

Overdraft charges and overdraft interest can quickly add up if you don’t make a payment to cover them, especially if you keep spending. In some cases, even if your debit card payment is declined, you can still be charged a fee that takes you into your overdraft – and be in debt before you know it.

Incurring this kind of debt can have a negative impact on your credit score and may also result in you losing any benefits, rewards, or discounts associated with your bank account.

Common causes of debit card debt

The most common cause of people falling into debt with their debit card is also the most obvious – someone spending money they don’t have.

Debit cards shouldn’t be used like credit cards. If you’re using yours to make payments when there aren’t enough funds in your account, you won’t receive points and rewards like you would from a credit card company. You will be overdrawn, and will face fees and charges that can be difficult to pay back.

Going into an unauthorised overdraft means that you will be charged a high rate of interest and a daily fee. While the amount can vary, managing a daily payment on top of everyday costs can often cause people to become further and further overdrawn. This in turn will mean that you will end up paying back more than the original transaction that took you into the red in the first place.

You can also incur charges by using your debit card abroad. Fees can be added with every payment, which can leave you with a hefty bill by the time you arrive home. It’s important to check the terms of your bank account and seek guidance before you leave to make sure you avoid travel charges when you return home.

How to keep on top of debit card debt

Debit cards aren’t designed to get people into debt, but there are steps you can take to help stay on top of your debit card purchases.

Check in frequently

It’s important to check your account regularly before you make purchases or withdraw money. Personal finance reviews will help you to avoid spending money that you don’t have and becoming overdrawn.

Track your spending

Using a banking app or online banking allows you to keep track of your transactions and control your spending. Doing this will help you avoid a low balance and reduce the risk of charges.

Set a budget

Setting yourself a weekly spending budget is one of the best ways to control your finances. Giving yourself limits means you will know exactly where your money goes each week and allows you to be prepared for unexpected expenses.

How can I get help with debit card debt?

Debit card debt can happen to anyone. When you have a lot going on, it’s easy to make payments without thinking too much about it. But once you’re overdrawn, juggling fees and charges with the cost of everyday life can put you even further in debt.

If you’re struggling with debt and need support, we can help. IVA Plan helps people deal with their debt every single day, offering the support, guidance, and money advice you need to get back on solid ground.

We can start to work through your debt problems from the moment you contact us, offer you confidential debt advice, and help you find the solution that’s right for your situation.