Which Transactions Count As Debit Card Purchases?

A debit card is a payment card that deducts funds directly from your checking account. They’re primarily used to make purchases or withdraw cash from an ATM. According to a J.D. Power report, more people use debit cards than cash, credit cards or other forms of payment when making purchases.

Debit cards (and the checking accounts linked to them) offer many advantages, including the ability to pay without cash. To get the most out of these benefits, it’s important to know exactly which transactions qualify as debit card purchases.

Definition of a Debit Card Purchase

A debit card purchase occurs when you pay for goods or services using your debit card—either with a PIN, signature or digital wallet—or when making an online purchase using your debit card number. Paying one-time or recurring bills, such as a utility bill, also qualifies as a purchase when you provide your debit card number.

Debit card and credit card transactions have important differences. Debit card purchases are immediately withdrawn from your checking account balance. In contrast, when you use a credit card to make a purchase, you borrow money using the line of credit provided by the credit card issuer. You receive a monthly bill, which you must pay in full by the due date to avoid paying interest fees. Paying credit card bills helps build your credit history, but debit card transactions do not become part of your credit history.

Types of Debit Card Purchases

Three major categories of transactions qualify as debit card purchases:

1. Point-of-sale-purchases: These purchases occur when you buy something in a store using a debit card by swiping your card, inserting your card into a chip reader, or using contactless payment. The purchase can be completed by providing your PIN or signature or by using a digital wallet.
2. Online purchases: These transactions occur when you provide your debit card number to make e-commerce purchases. You complete the purchase by entering the expiration date and the three-digit CVV code on the back of the card by using a digital wallet.
3. One-time or recurring payments: These transactions occur when you provide your debit card number to pay for subscriptions, memberships and automated bill payments for utilities, streaming services and other recurring payments.

Which Types of Transactions Aren’t Debit Card Purchases?

Not all transactions qualify as debit card purchases. In some cases, the transaction is not an actual purchase. Here’s an overview of transactions sometimes mistakenly assumed to be debit card purchases.

1. ATM withdrawals and related fees

Your debit card is linked to your checking account. When you use your card to get cash from an ATM, the funds and any transaction fees are deducted directly from your account. ATM withdrawals do not qualify as purchases because you’re not buying goods or services.

2. Cash advances

These transactions involve withdrawing cash from an ATM or through a bank teller using a credit card or, with special arrangement, a debit card. Cash advances are technically loans from the bank rather than direct deductions from your checking account. They do not involve the purchase of goods or services.

3. Check payments

Checks and eChecks (electronic checks) are a form of direct payment in which funds are deducted from your checking account. These payments are processed through banking networks rather than debit card networks.

4. Deposits and internal transfers

Making a deposit into a bank account or transferring money between accounts within the same bank, such as moving funds from your checking account into your savings account, don’t qualify as a purchases. They are considered account management activities rather than purchases and are not processed through a debit card network.

5. Account fees

Banking fees—such as monthly maintenance fees, overdraft fees and ATM fees—and other service fees charged by your bank do not qualify as a purchase. They are automatically deducted from your account, so they’re not considered a transaction you initiate.

6. Loan payments

Payments for mortgages, personal loans, auto loans and other types of credit agreements do not qualify as a debit card purchase. That’s because they’re usually processed as direct debits or electronic funds transfers (EFTs) and not in the networks that process standard debit card transactions.

7. Wire transfers and ACH transfers

Electronic transfers between banks and other financial institutions, including Automated Clearing House (ACH) transactions, do not qualify as debit card purchases because they are processed through separate banking networks and do not involve the use of a debit card for the transfer of funds.

8. Pre-authorized ACH debits

Recurring payments set up directly with a service provider, such as gym memberships or insurance premiums, where you authorize the provider to withdraw funds directly from your checking account do not qualify as a debit card purchase. These transactions are typically processed as direct debits through ACH rather than debit card transactions. However, your bank’s online or mobile banking service may offer the option of setting up recurring payments using your debit card number (Quorum allows you to use your debit card for these recurring payments). These transactions would qualify as debit card purchases.

9. Peer-to-peer (P2P) transfers

These transfers are digital payments between two people in which funds are transferred directly from one person’s bank account or payment app to another person’s bank account or app. PayPal, Venmo and Zelle are popular P2P payment platforms that make it easy, fast and secure to transfer funds. A P2P transfer—repaying a friend when splitting a dinner bill is a common example—does not qualify as a debit card purchase because you’re not directly paying for goods or services with your debit card.

10. Purchases made with other types of cards

Using credit cards, prepaid cards, or gift cards for a transaction does not qualify as a debit card purchase. These purchases are processed outside debit card networks. For example, a credit card purchase does not withdraw funds directly from your checking account at the time of your purchase.

11. Payment reversals and refunds

When a merchant reverses a debit card transaction or issues a refund to your debit card, these adjustments to previous transactions do not qualify as new purchases. Keep in mind that a reward program may deduct the amount of a reversal or a refund from your accumulated rewards or points.

The Impact of Debit Card Purchases on Checking Accounts

You’re probably familiar with credit cards that offer rewards and benefits for purchases. Common reward types include cash back, airline frequent flier miles and hotel points. Debit cards don’t traditionally provide rewards or benefits, but some financial institutions offer checking accounts with benefits that are based on qualifying debit card purchases. For example, Quorum’s new QBoost high-yield checking account allows you to earn an even greater interest rate when use your debit card at least 10 times per month.

Security and Fraud Protection Considerations

Because your debit card is linked directly to your checking account, it’s essential to take basic security measures and monitor your debit card transactions to confirm that no unauthorized withdrawals or purchases are being made.

To keep your debit card secure, choose a strong PIN—one that no one can guess; keep it private by not writing your PIN on the card or storing it with your card in your wallet. When entering your PIN, check your surroundings to ensure no one can see the numbers you’re entering on the keypad. If your debit card is lost, stolen or used without your authorization, notify your financial institution immediately. Ask them to cancel the card and send you a new one. If you think your PIN may have been compromised—for example, an online merchant notifies you that its network has experienced a data breach—change your PIN. You can also sign up for email or text alerts to keep track of all your debit card transactions.

Taking Full Advantage of Your Debit Card

A debit card offers many benefits, including withdrawing cash from an ATM and making purchases without using cash. It also helps you stick to your budget because it directly deducts funds from your account, unlike a credit card, which requires discipline to avoid overspending and accumulating debt. If you’re considering getting a debit card, compare the rules, fees, rewards and benefits of cards from different banks.