Banking » Guides » Checking Accounts vs. Debit Cards: How They Compare?
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Checking Accounts vs. Debit Cards: How They Compare?

Managing your money required a checking accounts, while debit card mainly designed for shopping and withdrawals. Here are the main differences
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
Interest Rates Last Update: June 3, 2024
The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.
Author: Baruch Mann (Silvermann)
Baruch Mann (Silvermann)

Writer, Contributor

Experience

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
Interest Rates Last Update: June 3, 2024

The banking product interest rates, including savings, CDs, and money market, are accurate as of this date.

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Table Of Content

In today's fast-paced world, managing your finances has become easier than ever.

With multiple options available to keep track of your spending and manage your money, two of the most popular choices are checking accounts and debit cards. Although they may seem similar at first glance, there are key differences between the two that can impact your financial management and spending habits.

In this article, we will explore the differences between checking accounts and debit cards, their pros and cons, and help you make an informed decision on which option is the best fit for your financial needs.

How Checking Accounts Work?

A checking account is a bank account that allows you to deposit and withdraw money, pay bills, and make purchases using checks, debit cards, or online banking. 

Checking accounts typically offer several features to help you manage your money. For example, you may be able to set up direct deposit, which allows your paycheck to be automatically deposited into your account. You may also be able to set up automatic bill payments, which can help you avoid late fees and keep track of your expenses.

However, there may be fees associated with using a checking account, such as monthly maintenance fees, overdraft fees, and ATM fees.

Ally tasks and menu options
Ally banking features on app (Screenshot taken by our team from Ally app)

How Debit Cards Work?

A debit card is a payment card that allows you to make purchases or withdraw cash from ATMs. When you use a debit card to make a purchase, the funds are automatically deducted from your checking account, so it's important to have enough money in your account to cover your transactions.

Debit cards offer several benefits over other payment methods and even compared to credit cards. For example, they are widely accepted and can be used to make purchases online, in stores, or over the phone. They are also more secure than carrying cash, as you can report any unauthorized transactions to your bank or credit union.

withdraw money with debit card from ATM
(Photo by Andrey_Popov/Shutterstock)

Checking Accounts vs. Debit Cards: Comparison

Although checking accounts and debit cards are often used together, they are not the same thing. Here are some key differences between the two:

Feature
Checking Account
Debit Card
Purpose
Deposit and withdraw money, write checks, and make online payments.
Access your money in a checking account.
Fees
May have monthly fees, ATM fees, and overdraft fees.
May have ATM fees and overdraft fees.
Interest
May earn interest on your balance.
Does not earn interest.
Security
FDIC or NCUA insured up to $250,000.
Not FDIC or NCUA insured.
Convenience
Deposit and withdraw money, use your checks to pay bills, and make online payments.
Make purchases at stores and online, and withdraw money from ATMs.
Flexibility
Write checks, set up direct deposit, and have access to money 24/7.
Make purchases anywhere that accepts debit cards.
Eligibility
Meet certain requirements such as a minimum deposit.
Apply for a debit card with no credit check.
  • Purpose: A checking account is a bank account that you use to deposit and withdraw money, whereas a debit card is a payment card that you use to make purchases or withdraw cash.
  • Access: With a checking account, you can access your funds through checks, ATM withdrawals, or online banking. With a debit card, you can access your funds through purchases or ATM withdrawals.
  • Fees & Interest: Checking accounts may have fees associated with them, such as monthly maintenance fees, overdraft fees, and ATM fees. They can also earn interest on balance. Debit cards may also have fees, such as foreign transaction fees or ATM fees, but they are typically lower than those associated with checking accounts, and it doesn't earn interest.
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Fees:
No monthly fees No monthly fees and no overdraft fees. Plus get reimbursed for ATM fees with an active account 
Rewards:
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Promotion:
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Up to 3.30% APY
to get the maximum rate (up to $50,000) you'll need monthly direct deposits of $1,500 (0.40% APY), 10 transaction on your debit card (+0.30% APY), average daily balance of $2,500 on Axos Invest Managed Portfolio (+1.00% APY), average daily balance of $2,500 on Axos Invest Self Directed Trading Account(+1.00% APY) and make full monthly payment on loans (mortgage, personal and auto) with Axos account (+0.60% APY).

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• Receive a cash bonus of $3,500 when you deposit or invest $500,000+

• Earn an extra $500 when you set up recurring monthly Direct Deposits totaling at least $5,000 for 3 months
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Get access to wealth products, insights and advice from an HSBC Financial Professional through HSBC Securities (USA) Inc
Advertiser Disclosure
The product offers that appear on this site are from companies from which this website receives compensation.
Top Offers From Our Partners

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Promotion:
Up to $400 Open a new, select Virtual Wallet product and receive $500/$2,000/$5,000 or more in qualifying monthly direct deposits within 60 days to earn a $100/$200/$400 bonus.
Subject to state availability
PNC Virtual Wallet ® is available in AL, AZ, CA, CO, DC, DE, FL, GA, IL, IN, KY, MD, MI, NC, NJ, NY, NM, OH, PA, SC, TX, VA, WI, and WV. Virtual Wallet ® is offered in the state of MO with the exception of the Greater Kansas City area. Product availability may vary based on where you open your account and the Zip code of your primary address.

Chase_logo

Promotion:
$300 New Chase checking customers enjoy a $300 bonus when you open a Chase Total Checking® account and make direct deposits totaling $500 or more within 90 days of coupon enrollment.. Expired on 7/24/2024
Chase Overdraft Assist
With Chase Overdraft AssistSM, you won’t be charged an Overdraft Fee if you’re overdrawn by $50 or less at the end of the business day OR if you’re overdrawn by more than $50 and you bring your account balance to overdrawn by $50 or less at the end of the next business day

UpgradeLogo

Fees:
No monthly fees No monthly fees and no overdraft fees. Plus get reimbursed for ATM fees with an active account 
Rewards:
Up to 2% cash back Up to 2% cash back on common everyday expenses for active accounts with monthly $1,000 direct deposit, and up to 1% cash back for other purchases 
Promotion:
$300 Use Promo Code “AXOS300” for a $300 bonus when you apply for a Rewards Checking account
Up to 3.30% APY
to get the maximum rate (up to $50,000) you'll need monthly direct deposits of $1,500 (0.40% APY), 10 transaction on your debit card (+0.30% APY), average daily balance of $2,500 on Axos Invest Managed Portfolio (+1.00% APY), average daily balance of $2,500 on Axos Invest Self Directed Trading Account(+1.00% APY) and make full monthly payment on loans (mortgage, personal and auto) with Axos account (+0.60% APY).

Promotion:
Up to $4,000 New customers may earn up to $4,000 when they open an eligible HSBC Premier checking account from January 8, 2024 through March 27, 2024 and complete qualifying activities:

• Receive a cash bonus of $1,500 when you deposit or invest $100,000 – $199,999.99

• Receive a cash bonus of $2,000 when you deposit or invest $200,000 – $299,999.99

• Receive a cash bonus of $2,500 when you deposit or invest $300,000 – 499,999.99

• Receive a cash bonus of $3,500 when you deposit or invest $500,000+

• Earn an extra $500 when you set up recurring monthly Direct Deposits totaling at least $5,000 for 3 months
Wealth Products & Advice
Get access to wealth products, insights and advice from an HSBC Financial Professional through HSBC Securities (USA) Inc
Advertiser Disclosure
The product offers that appear on this site are from companies from which this website receives compensation.

When You May Need A Checking Account?

While a debit card can be a convenient way to make purchases and manage your money, there are several reasons why you may need a checking account in addition to or instead of a debit card:

  • Writing checks: If you need to make payments to individuals or businesses that do not accept debit cards, a checking account may be necessary. Writing checks is a traditional method of payment that is still widely used today, particularly for larger transactions like rent or mortgage payments.

  • Direct deposit: Many employers offer direct deposit, which allows your paycheck to be automatically deposited into your checking account. This can save you time and hassle compared to depositing a physical check, and may also help you avoid fees associated with cashing a check.

Ally create direct deposit
Create direct deposit with Ally (Screenshot taken by our team from Ally app)
  • Bill payments: While you can use a debit card to make one-time payments for bills, a checking account can be more convenient for setting up recurring payments. Many banks offer online bill pay services, which allow you to schedule payments in advance and avoid late fees.
  • Access to more banking services: In addition to checking and savings accounts, many banks offer other financial services like loans, credit cards, and investment accounts. Having a checking account with a bank can give you access to these services and other great banking features and help you manage your finances more effectively.

  • Higher transaction limits: Checking accounts typically have higher transaction limits than debit cards, which can be useful if you need to make large purchases or withdraw a significant amount of cash.

Overall, a checking account can be a useful tool for managing your finances

Checking account vs debit cards
To manage your money, you'll need a checking account (Photo by UnderhilStudio/Shutterstock)

When A Debit Card May Be Sufficient For Your Needs?

A debit card may be sufficient for your needs if you have relatively simple financial needs and do not require the additional features and services offered by a checking account. Here are some situations in which a debit card may be sufficient:

  • Everyday spending: If you mainly use your card for everyday purchases like groceries, gas, or dining out, a debit card can be a convenient and secure payment option.

  • Online shopping: Many online retailers accept debit cards, so if you primarily shop online, a debit card may be all you need.

  • Budgeting: A debit card can be a useful tool for sticking to a budget, as you can only spend what you have in your account. This can help you avoid overspending and accumulating debt.

  • ATM withdrawals: If you primarily use your card to withdraw cash from ATMs, a debit card may be sufficient for your needs.

  • Travel: Debit cards are widely accepted internationally and may offer lower fees than credit cards for foreign transactions.

Checking Account
Debit Card
Writing checks
Everyday spending
Direct deposit
Online shopping
Bill payments
Budgeting
Access to more banking services
ATM withdrawals
Higher transaction limits
Travel

Alternatives To Checking Account And Debit Crad

While checking accounts and debit cards are popular financial tools, there are several alternatives that you may consider depending on your financial needs and preferences. Here are some of the main alternatives to checking accounts and debit cards:

  • Cash: Cash is a universally accepted payment method that does not require a bank account or payment card. However, carrying large amounts of cash can be risky and inconvenient.

Using cash only pros and cons
Using cash only has many benefits, but it's not convenient for most people (Photo by Africa Studio/Shutterstock)
  • Credit cards: Credit cards allow you to make purchases and borrow money up to a certain credit limit. Unlike a debit card, which draws funds from your checking account, a credit card allows you to borrow money that you must pay back with interest. Also, credit cards offers rewards such as cash back or travel perks.
  • Prepaid cards: Prepaid cards are payment cards that are loaded with a specific amount of money. They can be used like debit cards to make purchases or withdraw cash, but once the balance is depleted, the card must be reloaded with more funds.

  • Online payment services: Online payment services like PayPal and Venmo allow you to send and receive money electronically. They can be linked to your bank account or payment card, and are often used for peer-to-peer payments.

Venmo as an online payment system
Venmo app
  • Cryptocurrency: Cryptocurrency is a digital currency that is decentralized and operates independently of traditional financial institutions. While still a relatively new technology, cryptocurrency can be used for online purchases and as a speculative investment.

Checking Accounts Reviews

Picture of Baruch Mann (Silvermann)

Baruch Mann (Silvermann)

Baruch Silvermann is a financial expert, experienced analyst, and founder of The Smart Investor.  Silvermann has contributed to Yahoo Finance and cited as an authoritative source in financial outlets like Forbes, Business Insider, CNBC Select, CNET, Bankrate, Fox Business, The Street, and more.
Search
Best Checking Accounts
Top Offers From Our Partners

PNC bank logo

Promotion:
Up to $400 Open a new, select Virtual Wallet product and receive $500/$2,000/$5,000 or more in qualifying monthly direct deposits within 60 days to earn a $100/$200/$400 bonus.
Subject to state availability
PNC Virtual Wallet ® is available in AL, AZ, CA, CO, DC, DE, FL, GA, IL, IN, KY, MD, MI, NC, NJ, NY, NM, OH, PA, SC, TX, VA, WI, and WV. Virtual Wallet ® is offered in the state of MO with the exception of the Greater Kansas City area. Product availability may vary based on where you open your account and the Zip code of your primary address.

Chase_logo

Promotion:
$300 New Chase checking customers enjoy a $300 bonus when you open a Chase Total Checking® account and make direct deposits totaling $500 or more within 90 days of coupon enrollment.. Expired on 7/24/2024
Chase Overdraft Assist
With Chase Overdraft AssistSM, you won’t be charged an Overdraft Fee if you’re overdrawn by $50 or less at the end of the business day OR if you’re overdrawn by more than $50 and you bring your account balance to overdrawn by $50 or less at the end of the next business day

UpgradeLogo

Fees:
No monthly fees No monthly fees and no overdraft fees. Plus get reimbursed for ATM fees with an active account 
Rewards:
Up to 2% cash back Up to 2% cash back on common everyday expenses for active accounts with monthly $1,000 direct deposit, and up to 1% cash back for other purchases 

Promotion:
$300 Use Promo Code “AXOS300” for a $300 bonus when you apply for a Rewards Checking account
Up to 3.30% APY
to get the maximum rate (up to $50,000) you’ll need monthly direct deposits of $1,500 (0.40% APY), 10 transaction on your debit card (+0.30% APY), average daily balance of $2,500 on Axos Invest Managed Portfolio (+1.00% APY), average daily balance of $2,500 on Axos Invest Self Directed Trading Account(+1.00% APY) and make full monthly payment on loans (mortgage, personal and auto) with Axos account (+0.60% APY).

penfed personal loan

APY on Daily Balances
0.15% APY on daily balances of less than $20,000 or 0.35% APY on daily balances of $20,000 up to $50,000
Get paid up to 2 days early
Set up direct deposits and get your paycheck up to 2 days early

Promotion:
Up to $4,000 New customers may earn up to $4,000 when they open an eligible HSBC Premier checking account from January 8, 2024 through March 27, 2024 and complete qualifying activities:

• Receive a cash bonus of $1,500 when you deposit or invest $100,000 – $199,999.99

• Receive a cash bonus of $2,000 when you deposit or invest $200,000 – $299,999.99

• Receive a cash bonus of $2,500 when you deposit or invest $300,000 – 499,999.99

• Receive a cash bonus of $3,500 when you deposit or invest $500,000+

• Earn an extra $500 when you set up recurring monthly Direct Deposits totaling at least $5,000 for 3 months
Wealth Products & Advice
Get access to wealth products, insights and advice from an HSBC Financial Professional through HSBC Securities (USA) Inc
Advertiser Disclosure
The product offers that appear on this site are from companies from which this website receives compensation.
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