How does a debit card purchase work?

How does a debit card purchase work?

• A. The purchase amount is charged to a credit line
• B. The purchase is deducted from savings account after authorization
• C. The purchase is deducted immediately from your checking account
• D. The purchase amount accumulates for a monthly payment

Answer: (C)

A debit card purchase works by directly accessing the funds in the linked checking account. When a consumer uses a debit card to make a purchase, the amount spent is immediately deducted from their checking account balance after the transaction is authorized. This means that the consumer can only spend what is available in their account, providing a practical way to manage finances without incurring debt. This immediate deduction is a key feature of debit cards, as it allows for real-time tracking of spending and ensures that the consumer does not go into overdraft unless they have an overdraft protection plan in place. By contrast, other options relate to different types of transactions or payment methods that do not accurately reflect how debit card purchases function. For instance, charging a credit line relates to credit cards, while accumulating purchases for a monthly payment is characteristic of a different billing cycle, also more in line with credit card usage.

A debit card purchase works by directly accessing the funds in the linked checking account. When a consumer uses a debit card to make a purchase, the amount spent is immediately deducted from their checking account balance after the transaction is authorized. This means that the consumer can only spend what is available in their account, providing a practical way to manage finances without incurring debt.

This immediate deduction is a key feature of debit cards, as it allows for real-time tracking of spending and ensures that the consumer does not go into overdraft unless they have an overdraft protection plan in place. By contrast, other options relate to different types of transactions or payment methods that do not accurately reflect how debit card purchases function. For instance, charging a credit line relates to credit cards, while accumulating purchases for a monthly payment is characteristic of a different billing cycle, also more in line with credit card usage.