Unit 1 Lesson 2 Introduction For many Americans debit cards are quickly replacing personal checks as a means of making payments Students should be able to recognize the difference between a debit card ATM card and a credit card ID: 256679
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Slide1
ATM/Debit Cards
Unit 1: Lesson 2Slide2
Introduction
For many Americans,
debit cards
are quickly replacing personal checks as a means of making payments. Students should be able to recognize the difference between a debit card, ATM card, and a credit card.
Cards used exclusively for an automated teller machine, or ATM, are being used less frequently today because many merchants will not accept them. An
ATM card
does not have a visible credit card logo.Slide3
Introduction
Most debit cards, on the other hand, can be used with merchants as well as an ATM machine. In the future, debit cards may replace checks because they are easier to use and recordkeeping is similar:
debits
must be subtracted from a bank account. Students will learn the advantages and disadvantages of debit cards and practice the type of recordkeeping they will use at JA Finance Park.Slide4
Key Terms
ATM
A card that allows basic financial services from an automated teller machine.
Debit
The amount deducted from a bank account.
Debit Card
A card that looks like a credit card but operates like cash; money is immediately subtracted from the user’s bank account.Slide5
View of an ATM/Debit Card
Operates like check or cash. The transaction amount immediately comes out of your account with no interest charge.
Can be used wherever credit cards are accepted
(card logo will be displayed).
Can be attached to a checking or savings account, and sometimes both.
Can be used to withdraw cash at ATMs or when making a purchase using the card’s PIN (personal identification number).
A Debit CardSlide6
View of an ATM/Debit Card
Is easier to carry and more readily accepted than a check. This is especially useful when traveling out of town where your check might not be taken.
Usually has no annual fee; however, be careful where you use your card, because there may be fees, especially when withdrawing cash.
A Debit CardSlide7
View of an ATM/Debit Card
Can be a problem if an error is made. When making error corrections, many retailers will do a “void transaction,” which cancels the sale and prevents it from being processed. This system works fine with credit cards, but
with debit card transactions, once an approval code is obtained, your money is held. A “voided transaction” will not be removed until released by the retailer, which can sometimes take up to 30 days! That means those funds may be out of your reach for some time.
A
Debit
CardSlide8
View of an ATM/Debit Card
Is not reported to credit bureaus and, therefore, is not a way to build credit history.
Can cause a financial fiasco if it falls into the wrong hands because the amount comes straight out of your account.
If a thief gets your card – or even just the account number – he can clean out your account along with any overdraft protection.
A Debit CardSlide9
View of an ATM/Debit Card
Can be used to withdraw cash at ATMs using the card’s PIN. The withdrawal amount immediately comes out of your account with no interest charge.
Can be attached to a checking or savings account, and sometimes both.
An ATM CardSlide10
Question Session
Which card(s) can be used to make purchases?
Debit Card
Which card(s) can be
u
sed to withdraw cash?
ATM card
Debit Card
What does debit mean?
An amount deducted from a bank accountSlide11
Word Map – Page 37
Credit Cards
Buy Now, Pay Later
Debit Cards
Buy Now, Pay Now
ATM
Automatic Teller
Machine
Debit
SubtractSlide12
Debit Cards – Page 6
A debit card is just another name for a credit card.
False
A debit card is similar to a credit card because both are used as a method to buy now, pay now.
False
Use of a debit card takes money directly from a person’s bank account.
TrueSlide13
Debit Cards – Page 6
4. Someone can make a purchase with a debit card even if there is not enough money in his/her bank account.
False
5. Using a debit card is the same as securing a loan.
False
6. There are no advantages to using a debit card instead of a check.
FalseSlide14
Debit Cards – Page 6
7
. Businesses are more likely to accept a debit card than a check.
True
8. Even if a debit card is not stolen, a thief can still use it to make purchases.
True
9. It’s important to keep track of debit card purchases so you know how much money is in your account.
TrueSlide15
Page 7 – Debit Cards:
Beyond Cash and Checks
Debit cards, also known as check cards or ATM (automated teller machine) cards. A debit card operates like cash or a personal check. When you use a debit card, you buy now and pay now. Debit means subtract. As a rule, debit cards allow you to spend only what is in your bank account. Your purchase is instantly deducted from your checking or savings account. Slide16
Page 7 – Debit Cards:
Beyond Cash and Checks
Debit cards are accepted at many businesses, such as grocery stores, retail stores, gas stations, and restaurants. You can use a debit card anywhere merchants display your card’s brand name. Using a debit card gives you an alternative to carrying a checkbook or cash. Some stores might be more likely to accept a debit card than your personal check because the payment is approved and credited to the merchant immediately.Slide17
Page 7 – Debit Cards:
Beyond Cash and Checks
When you use a debit card, you are subtracting your money from your own bank account. A credit card, on the other hand, involves using credit. A debit card us not the same as a credit card. Credit is money given to you by a bank or other financial institution. It is a loan. You can
u
se the credit card with the understanding that you will repay the money you have used, plus interest and any finance charges, if you do not pay debit in full each month.Slide18
Page 7 – Debit Cards:
Beyond Cash and Checks
What you should know about debit cards:
Obtaining a debit card is often easier than obtaining a credit card.
Using a debit card instead of writing checks saves you from showing identification or giving out personal information.
Using a debit card frees you from carrying cash, traveler’s checks, or a checkbook.
Debit cards might be more readily accepted than checks by merchants.Slide19
Page 7 – Debit Cards:
Beyond Cash and Checks
What you should know about debit cards:
The debit card is a pay-now product with no grace period for payments.
Use of a debit card may not offer the same protection as a credit card for items you purchase that are not delivered, are defective, or were misrepresented.
Returning goods or canceling services purchased with a debit card is handled the same as if you made the purchase with cash or a check.Slide20
Page 7 – Debit Cards:
Beyond Cash and Checks
What you should know about debit cards:
With a debit card, you are using your own money. It is estimated that two-thirds of American households now use debit cards. Debit cards will continue to rival cash and checks as a form of payment as consumers continue to look for convenient ways to make purchases. Slide21
Record
All Charges or Credits Than Affect Your Account – Register 1
#
Date
Transaction Description
Debit (-)
V
Fee
Credit
(+)
Balance
$634.51
3/21
Deposit - Paycheck
+ 931.72
+ 931.72
$1,566.23
3/20
3/30
3/25
3/26
3/22
3/21
Central Bank
Power Company
Water Company
Dividend
Mainland’s Furniture
Corner Market
-65.39
-65.39
-46.50
-298.53
-737.52
-46.50
-737.52
-298.53
-22.52
-22.52
+ 56.23
$1,500.84
$1,454.34
$716.82
$418.29
$395.77
+ 56.23
$452.00
1320
1321
1322
Debit
DebitSlide22
Record
All Charges or Credits Than Affect Your Account
#
Date
Transaction Description
Debit (-)
V
Fee
Credit
(+)
Balance
$452.00
3/30
VOID #1322
+ 737.52
+ 737.52
$1,189.52
3/30
4/6
4/3
3/31
Pacific Hardware
Withdrawal
Central Bank
State Ranch - Insurance
-773.25
-773.25
-20.00
-246.45
-18.99
-20.00
-18.99
-246.45
$416.27
$396.27
$377.28
$130.83
1323
Debit
Debit
1324Slide23
Homework
Complete Scenario & Register II
Complete Scenario
& Register III