Debit cards

Using your own money

A debit card offers all the convenience of making payments with a card, minus the pain of credit debts. But there are still things to watch out for.

1. How debit cards work

2. Dual purpose cards (credit and debit)

3. PIN only debit cards

4. Using your debit card online or overseas

5. Chargebacks

6. Debit card fees and charges

How debit cards work

When you use a debit card, it takes money from your account to pay for purchases. If there is no money in your account, you can't make the purchase.

In other words, a debit card uses money you have, while a credit card uses money you don't have. Using debit cards helps you avoid running up a debt you have to pay back later.

The most common type of debit card is an ATM (automated teller machine) or EFTPOS card. The card is used to withdraw money at ATMs and make purchases. You have to provide a personal identification number (PIN) before you can withdraw money or make a purchase.

Debit cards are called different names depending on who issues the card. To find out more, ask your financial institution what kind of debit card it offers.

Cash withdrawal

Some merchants may offer you 'cashback' or 'cashout' facilities, where you can withdraw cash along with your debit card purchase.

Some debit cards also provide a guarantee for internet transactions. You won't be charged for unauthorised or fraudulent transactions if you report them to the bank within a certain time.

Dual purpose cards (credit and debit)

Some debit cards can also be used as credit cards but may charge high interest if you use them this way. If you are considering switching from a credit card to a debit card to avoid debt, make sure your debit card does not offer a credit facility.

If you want to use a dual purpose card to pay by debit you should insert your card into the EFTPOS machine at the checkout and select 'SAV' or 'CHQ'.

If you want to pay by credit you can either tap or wave your card over the payment terminal (if you have a contactless card) or you can insert your card into the EFTPOS machine and select 'CR'.

If you use your card on a contactless terminal (PayPass or payWave) you will always be paying by credit.

Some debit card accounts allow you to establish a line of credit, where you can overdraw your account up to a specified limit. However, the overdraw fees can be very high. You could end up paying more to use your debit card as a credit card, than you would on a regular credit card.

Using your debit card online or overseas

Be careful when using a debit card overseas or for shopping on the internet. Unlike credit card fraud, any amount stolen comes directly from your own funds and it may take some time to get the money back into your account.

PIN only debit cards

From 1 August 2014 you will not be allowed to sign for debit card and credit card purchases when you are buying a product at a point of sale. You'll need to enter your PIN to authorise the transaction.

This change will only affect transactions where you're physically present at the point of sale and if the card you're using has an embedded smart chip. You'll continue to sign when using chip-less cards with a magnetic strip at the back (for example some pre-paid cards and gift cards).

This change won't impact online shopping, telephone purchases or contactless card transactions such as Visa's payWave and MasterCard's PayPass where you wave your card or tap and go.

Overseas use of your card

Be aware that your PIN might not work when you use your credit card overseas. Depending on the overseas merchant, you may still need to use a signature to authorise purchases.

What you need to do

If you don't have a PIN or have forgotten it, contact your bank or card issuer to organise a PIN before 1 August 2014. You'll need a PIN that's difficult to guess and not associated with any known information about you such as an anniversary.

If you think you'll have difficulty remembering a PIN, contact your card issuer to discuss your options.

If you have questions about the security of this new method of transaction, speak to your card issuer.


You may have chargeback rights when you make a purchase using a debit card and something goes wrong, such as not receiving the goods or the same transaction has been processed more than once.

A chargeback is where you make a request to your bank or card company to get the money back from the merchant or shop. To find out when and how to request a chargeback, see the terms and conditions of your debit card or contact your bank or card issuer.

There are some circumstances when chargebacks may not be available, such as when you use your debit card to make a BPAY payment.

Debit card fees and charges

Most accounts offer a number of free electronic transactions per month, and then charge you for any excess transactions. Fees will usually vary depending on whether it is an online, ATM, EFTPOS or branch transaction. Check what fees apply for different types of debit card transactions.

Merchant surcharges

Debit card purchases can attract a surcharge that some retailers will pass on to you. You must be adequately informed of any surcharge before you pay.

Where a payment method attracting the surcharge is compulsory the retailer must clearly list the surcharge alongside the price. Where the surcharge is optional the retailer must clearly inform you of the surcharge and another way you can pay that avoids the charge.

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