An ATM card is a type of bank card that allows you to access your bank account at an automated teller machine (ATM). You can use the card to withdraw cash, check your balance, and perform other banking transactions at ATMs. Unlike a debit card, however, you can’t use an ATM card to make purchases or get cash back in a grocery store.
Here’s a closer look at what ATM cards are, how they work, and how they differ from debit cards.
How ATM Cards Work
ATM cards first came out in the late 1960s as a way to enable account holders to withdraw funds from a checking account at an ATM. While they’ve largely been replaced by debit cards, banks still issue ATM-only cards for some checking and savings accounts.
To use an ATM card, you simply insert your card into an ATM. The machine then reads the magnetic stripe or embedded chip on the card and prompts you to enter your personal identification number (PIN), which verifies your identity as the account holder. Once authenticated, you can perform a number of different transactions, such as withdrawing cash, transferring funds between accounts, and checking your account balance. Some banks also allow you to use an ATM card to deposit cash or checks into an account.
ATM Cards vs Debit Cards
The terms “ATM card” and “debit card” are often used interchangeably, but they are not the same thing. While most debit cards can also be used as ATM cards, ATM cards can’t be used in all the same ways as debit cards.
Along with offering all the functionality of an ATM card, a debit card also allows you to make purchases both in-store and online, just as you would with a credit card. Unlike using a credit card, however, the payment immediately gets deducted from the linked checking account.
While some debit cards allow you to choose “credit” at the payment terminal when you shop, this doesn’t turn it into a credit card. The only difference between selecting “credit” instead of “debit” when making a purchase with a debit card is that there will be a short delay in the processing of the transaction — anywhere from a few hours to three days.
Another difference between debit and ATM cards is that debit cards have the word “Debit” printed on the front.
Because debit cards offer more functionality than ATM cards, these days you will typically receive a debit (not an ATM-only) card when you open a new bank account.
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Benefits of Using an ATM Card
Here’s a look at some of the advantages of ATM cards.
• Convenience: ATM cards allow you to access your funds at an ATM rather than through a teller. As a result, you don’t have to stand in line at the bank, and you can manage your account at any time (not only during the bank’s business hours).
• No spending temptation: Since ATM cards cannot be used for purchases, they can help you avoid impulse spending and better manage your finances.
• No fees (when used correctly). As long as you use your ATM card at in-network ATMs, you can avoid getting hit with any ATM fees.
Drawbacks of Using an ATM Card
• You can still overdraft: If you opt into overdraft services, you may be able to withdraw more money that you have in your account. The bank may view this as a loan and charge transfer fees and interest.
• Limited functionality: ATM cards can only be used to manage your account at an ATM. You can’t use this type of card for purchases, making it less convenient than a debit card.
• Withdrawal limits: Some ATM cards come with relatively low daily withdrawal limits, which can be a challenge at moments when you want access to higher amounts of cash.
Keeping ATM Cards Secure
Your ATM card allows you to get your hands on your money, so you don’t want it (or your PIN) to fall into the wrong hands. Some safeguards to keep in mind:
• Keep your ATM card securely stored. No one should have access to the card but you, so be sure to keep it in a safe place, just like you would cash, checks, or credit cards. If your card gets lost or stolen, it’s important to immediately notify your bank.
• Protect your PIN. Try to avoid writing your pin down, especially on or near your ATM card. Also be careful to never give any information about your PIN (or ATM card) over the phone. For example, if you get a call from someone claiming to be from your bank or the police asking to verify your PIN, don’t offer the information. Hang up and call your bank directly.
• Monitor your account. Another type of bank fraud, called ATM skimming, can occur where criminals put a hidden electronic device on an ATM card reader that gets information from a bank card whenever a customer uses the machine. Though rare, it’s wise to regularly check your bank statements and account activity to ensure there aren’t any unauthorized withdrawals from your bank account. If you notice anything suspicious, contact your bank immediately.
Recommended: Bank Scams and How to Avoid Them
Alternatives to ATM Cards
ATM cards are a valuable money management tool but they’re not the only option. Here are some alternatives to ATM cards to consider.
• Debit cards: A debit card allows you to make ATM withdrawals like ATM cards do, but can also be used to make purchases wherever debit cards are accepted.
• Credit cards: These cards allow you to borrow funds up to a certain limit for purchases, with the added benefit of building credit history. However, they require responsible use to avoid debt.
• Prepaid Cards: Prepaid cards work like debit cards but are not linked to a bank account. You load funds onto the card and can use it for purchases and ATM withdrawals.
• Mobile payment apps: Apps like PayPal, Venmo, and Apple Pay allow you to make transactions and manage money electronically without needing a physical card.
The Takeaway
An ATM card allows you to utilize an ATM and perform basic account management functions without talking to — or waiting for — a teller. They can be an ideal tool for those who primarily need cash and basic banking services. However, ATM cards offer limited functionality compared to debit and credit cards, which can be a drawback in an increasingly digital economy.
When deciding whether to use an ATM card, you’ll want to consider your financial habits, needs, and the level of convenience you’re looking for. Exploring alternatives such as debit cards, credit cards, and mobile payment apps can help you find the best solution for managing your finances effectively.
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FAQ
Do I need a PIN for my ATM card?
Yes, you need a personal identification number (PIN) to use your ATM card. You’ll set your PIN when you receive your card. You’ll then need to enter it any time you access your account at an ATM, whether you’re withdrawing cash or simply checking your balance. This creates an added layer of protection to prevent unauthorized access to your funds.
Can I use my ATM card like a credit card?
No, you cannot use an ATM or debit card like a credit card. A true ATM card can only be used to manage your account at an ATM. A debit card functions like an ATM card but also allows purchases. When you make purchases with a debit card, however, the money is directly debited from your checking account. By contrast, a credit card allows you to borrow funds up to a limit and repay them later, typically with interest.
What if my ATM card is lost or stolen?
If your ATM or debit card is lost or stolen, you’ll want to immediately report the loss to your bank in order to prevent unauthorized transactions. Your bank will freeze or cancel the card and issue a replacement, usually with a new card number and PIN. After that, you’ll want to monitor your account closely for any suspicious activity. If the lost card was a debit card, you’ll also need to update any automatic payments linked to that card with the new card information to ensure continuity.
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