Check Card (also known as Debit Card) - A check card can be used as an ATM card at ATMs around the world or since it is part of the Visa® / MasterCard® network, you can use it just like a credit card to make your purchases.

Check cards have become very popular by becoming a great alternative to carrying a checkbook or cash. This has given consumers the ability to manage their money effectively in a convenient and secure way.

A Visa® or MasterCard® Check Card may look like a credit card but it works just like cash or a personal check. The check card is basically a 'Plastic Check' which is linked directly to your checking account. As an ATM card it can be used to withdrawl money from your checking account at ATMs around the world and since it is part of the Visa® / MasterCard® network, you can use it just like a credit card to make purchases. However, instead of charging your purchases, the amount is deducted from your checking account so you never pay any finance charges. When you swipe your check card you will be asked to select the 'debit' or the 'credit' option. Some people don't realize that although the end result may be the same, the debit option and credit option have different ways of withdrawing the funds from your checking account.

Difference between the 'debit option' and 'credit option' when making a transaction using a check card:

• Debit Option -- When you choose the debit option on your check card, you will enter your Personal Identification Number (also known as PIN) to complete the transaction. With this option the purchase is deducted immediately from your checking account. This option also allows you choose to receive cash back during the transaction process.
• Credit Option -- When you choose the credit option on your check card, you will be required to sign the sales slip to complete the transaction. With this option the transaction will be processed just like a check, however it may take 2 - 3 days to clear your account.

Check cards have become very popular because of the convenience and safety they provide consumers. Check cards have sped up and simplified the checkout process by not having to write checks or carry a lot of cash. However, there are a few things about the check card that you should be aware so you can keep your shopping experience a convenient, secure and problem free process.

Blocking (also known as a 'hold' or 'authorization') -- Blocking is used by merchants to make sure consumers are not able to exceed their credit line on their credit card or overdraw their checking account with their debit card before the transaction is processed. Hotels, gas stations and rental car companies are a few companies that almost always use blocking. For example, you decide to take a mini vacation and make reservations at a hotel. When you check in, the clerk will swipe your card placing a block on your account for the estimated cost of your stay. This amount will be unavailable until the final transaction is completed, processed and the funds are unblocked. When you go to checkout of the hotel, your card will be swiped again and the final actual charge should replace the blocked amount within a day or so. However, in some cases these funds can be blocked for up to 15 days.

Security and Protection -- Loss or theft of a check card can mean big trouble for you. There are still laws that protect your loss if you notify the bank in a timely fashion, but since money is being withdrawn from your checking account in real time it may take a while to recover any stolen funds. Under the federal Electronic Fund Transfer Act (also known as EFTA) you are still protected from errors, loss or theft of your check card. However, unlike the Truth in Lending Act protections for credit cards which cap a consumer's liability for unauthorized transactions at $50, the law limits liability to $50 if the cardholder notifies the bank within 2 business days after discovering the theft. If you do not notify your bank within those 2 days, your liability limit jumps to $500. Even worse, if you fail to report the theft within 60 days of your bank statement showing the fraudulent transaction(s), your loss is UNLIMITED. This means you can possibly lose everything you have in your checking account and may not ever get it back. Even if you notify the bank within the 2 days, your bank has up to 10 business days -- or up to 45 if an investigation is required -- to restore your balance. This means that you may be out a lot of money for some time, so make sure you report any lost or stolen check card promptly.

Daily Spending Limits -- Sometimes banks will set a maximum daily spending limit on a check card for security purposes and this amount is usually based on the individual's account. This amount will vary by bank or credit union but most generally the daily spending limit will range anywhere from $1,000 to $3,000. This information will be posted in the Terms and Conditions of the check card or you can call or visit the website of the bank or credit union.

Transaction Fees -- This comes back to the PIN vs. the Signature. Your preference may be different then the merchants preference. That’s because merchants are charged a higher fee -- known as the interchange fee -- when consumers choose to sign for a transaction over entering a PIN. Although using the PIN (debit option) is more secure for cardholder, most merchants would prefer cardholders to use the Signature method (credit option). To encourage cardholders to use the signature method, banks will often use reward programs. (check card rewards aren't usually as generous as those credit card offered rewards) You have probably seen the TV commercials advertising the 'Skip the PIN and Win $25,000 sweepstakes!' So be sure to check to see if your check card charges you transaction fees to avoid any unexpected fees.

So, which option is the better option? Is it better to use the PIN option (debit option) or the Signature option (credit option)? I would have to say that is only a question that you can answer. If your bank or credit union does not charge you any transaction fees, it all boils down to personal preference. The PIN option is supposed to be more secure, while the Signature option is supposed to be faster, more convenient and you may even earn some rewards. Every person has a unique situation, so which ever option makes you feel safe and secure, than that is the option that you should use.