6 things you need to know about your debit card

You may feel like you’re an expert with your debit card — you swipe, tap or insert and you’re done. But understanding more about how they work can help you protect your money, avoid fees and make smarter choices about when and how to use them.

Whether you’re new to banking or just want to brush up on the basics, we have the answers to your top questions about debit cards.

A debit card is an electronic bridge to your money. It’s directly connected to your bank account.

When you make a debit transaction, funds are pulled from your account almost instantly. In this way, a debit card works much like paying with cash: You can only spend what you have in your account — usually your chequing account, although some debit cards link to savings accounts too. This makes it a simple, safe way to manage day-to-day purchases without the risk of racking up debt.

Here’s where things get interesting! Not all plastic (or digital) cards are created equal:

• Debit card: You’re spending your own money directly from your bank account.
• Credit card: You’re borrowing money from the card issuer. If you don’t pay it back in full each month, interest charges can add up — and quickly.
• Prepaid card: You load money onto the prepaid card in advance, then spend it down. These cards aren’t tied to your bank account, which makes them a popular option for gifting, budgeting or travel.

Another important difference to note: Only credit cards help you build a credit history. For newcomers or young adults just starting out, this matters because your credit score can affect everything from renting an apartment to qualifying for a car loan. Debit cards, while convenient, won’t move the needle on your credit profile.

Debit cards offer a mix of convenience, security and peace of mind.

Debit cards are convenient for:

• Contactless payments for purchases $250 or less (at stores where this is accepted) — Interac Flash^† capabilities allow an easy and touch-free way make purchases without entering your personal identification number (PIN), a quick tap and you’re on your way.
• Tracking spending via online banking and seeing transactions in real time. At Scotiabank, you can set up Scotia InfoAlerts, which instantly sends you an app notification, email or both when there’s been activity on your account. Check out how you can set it up today.
• Avoiding debt by drawing money directly from your bank account. It’s like having built-in guardrails that help keep you from overspending and straining your budget.
• Accessing through ABM withdrawals or cash back at certain retailers when making a purchase.

Debit card security features:

Rewards for debit card usage:

• Perks on transactions, such as points, are offered by some debit card providers. When you choose a Scotia Scene+™ debit card, you can earn points when spending online or in-store. Our rewards programs help you save on things like movies, meals, travel, gifts and much more. Learn more about the different debit cards you could choose.

Not all debit cards work the same way. In Canada, you’ll typically come across three main types:

• Interac-only debit cards: This homegrown option is widely accepted by Canadian retailers with point-of-sale terminals or at automatic banking machines (ABMs, which are also called Automatic Teller Machines or ATMs) but has limited use online or abroad.
• Co-branded debit cards: These combine Interac functionality with global networks, so you can make online purchases or use your debit card in person internationally at retailers that accept cards like Visa.

Co-branded debit cards with rewards programs: Banks, credit unions or other financial institutions may offer perks like points or cash back when you use your debit card, while also offering you the option to use them in person or online internationally. With your Scotiabank Scene+ debit card, you can earn points on everyday purchases and then redeem them with the Scene+^TM program.¹ Learn more about Scotiabank Scene+ debit cards here.

Debit cards are more versatile than ever. In Canada, most in-store retailers accept Interac for everyday purchases.

With a debit card from your bank, you can also use it for:

• Online purchases, such as shopping on e-commerce sites or paying for subscriptions.
• International transactions, thanks to global acceptance.
• Bill payments, such as utilities or insurance.
• Mobile wallet payments, letting you tap your phone or smartwatch instead of your physical card.

While debit cards make life easier, there are costs to keep in mind. Know what they are helps you plan — and keeps your money working for you:

• Monthly account fees: Depending on your bank account plan and provider, you may pay a flat fee that covers a set number of debit transactions.
• Transaction fees: Exceed your monthly allotment of debit purchases, and you could be charged per swipe or tap.
• ABM/ATM fees: Sticking to your bank’s machines usually avoids fees, but using out-of-network ATMs — especially abroad — can be pricey.
• Foreign currency fees: International debit transactions often carry extra charges, in addition to exchange-rate conversions.
• Temporary holds: Some retailers may place a hold on your funds for a few business days. This isn’t a charge, but it ties up money in your account and can be a surprise if you weren’t expecting it.

From your morning coffee run to paying your phone bill, debit cards are one of the most common ways Canadians move money. Since debit cards are connected to a bank account, there's no bill to pay later — the money's already been debited from the linked account. Remember to review your banking package so you can take advantage of all the debit card benefits that can make life easier.

Finding the right debit card for your needs helps you shop at thousands of merchants online, pay in-store in the US and at international retailers and could help you earn rewards on your purchases. Talk to your Scotia advisor about what options could work best for you.