How debit cards work

What you need to know before applying for a debit card.

What are debit cards?

Debit cards can come in different forms, but you are always using your own money from your account to make a purchase, rather than borrowing money.

Debit cards can be a safer option than credit cards if you are looking to avoid or reduce debt.

Cash withdrawals

While credit cards can be used for cash withdrawals, known as cash advances, they typically involve fees and additional interest charges.

In most cases, cash withdrawals using a debit card are free and can be made at any ATM or larger retailers, such as supermarkets.

Some ATMs may charge a transaction fee to withdraw cash, but they must always display the fee on the screen to give you the opportunity to cancel the transaction if you don’t want to pay the fee.


Purchases with a debit card use the EFTPOS payment platform which processes the transaction in real-time. This is an advantage over credit cards which can sometimes take days to process the transaction.

EFTPOS is usually limited to physical transactions using a debit card and PIN, although mobile and contactless payment options are increasingly common.

Dual-network cards

Some debit cards can use both the EFTPOS and credit card platforms, allowing users to make purchases online using the funds available in their account.

When making a purchase with dual-network cards you can choose which payment network to use.

Selecting SAV (savings) or CHQ (cheque) will mean you use the EFTPOS platform, while selecting CR (credit) will mean you are using the credit card platform. You may be charged a surcharge to use the credit card platform so it can be cheaper to use SAV or CHQ.

Both platforms will use the available funds in the account linked to your debit card, however if you choose to use a contactless payment method you will automatically use the credit platform.


The fees associated with debit cards are usually less than credit cards.

Banks vary in their offerings with some providing a limited number of fee-free transactions and others providing unlimited fee-free transactions.

When making purchases be aware of any merchant surcharges which you must be advised of before you make a payment.

How do credit cards work? Find out here.

The information in this article has been prepared for general information purposes only and not as specific advice to any particular person. Any advice contained in the document is general advice and does not take into account any person’s particular investment objectives, financial situation or needs. Before acting on anything based on this advice you should consider its appropriateness to you, having regard to your objectives, financial situations and needs.