A Brief History of Debit Cards

Over the years, many plastic cards have been introduced to cater to the different needs of consumers. Nowadays, there’s prepaid cards, debit cards, credit cards, and reloadable debit cards to name a few.

Of the cards mentioned above, the reloadable debit card is considered by many as the consummate alternative to credit cards. Why is this so? For starters, reloadable debit cards don’t come with many of the exorbitant charges and fees often associated with credit cards.


The first debit card was first issued by First National Bank of Seattle way back in 1978. Back then, it was only made available to business executives with a significant balance in their savings account. The first debit card first worked like a check signature or guarantee card.

Since the issuing bank promises to cover the transaction, only those individuals who are in good standing and have a long history with the bank were given access to the cards.

In 1984, the first ever nationwide debiting system was introduced officially, with ATM networks already set in place. The nationwide debiting system was built on the infrastructure used by credit cards. By 1998, check usage has been outnumbered by debit card usage the world over.


Debit cards are deemed a quick and easy way to pay for goods and services. Nowadays, there are several types available, each designed to cater to the different needs of cardholders. One conventional debit card is the tangible one that’s almost identical to a credit card. This type of card however is typically only issued by banks and credit unions.

There are also retailers who provide prepaid debit cards that function just like gift cards. These types of cards are often issued in specific amounts and are mostly associated with huge financial institutions like Visa or MasterCard. And unlike gift cards, said debit cards can be used almost anywhere.


While debit cards share a lot of surface similarities with credit cards, they are very much different when it comes to function. Unlike credit cards, debit card users won’t be borrowing money from the bank.

Instead, they will be drawing money from the balance on the cardholder’s checking account. If no funds are available, then no transactions can be also be done. Also, unlike checks, money will not float until such time that the bank is able to perform a complete transfer. With debit cards, transfer of funds is real time.

In addition, debit cards that are associated with established credit institutions like MasterCard or Visa works like a credit card in a way because transactions will “float” for at least 2 to 3 business days until the bank has transferred the funds.


One of the main (and most enticing) benefits of using a debit card is it will spare you from the hassles and inconvenience of carrying a checkbook and issuing checks. Debit cards are also a favourite among travellers as it makes doing transactions fast and effortless, even when outside the country.

With a debit card, you won’t need to stock up on traveller’s checks and foreign currency just to do a purchase transaction when travelling abroad. Also, even when stolen or lost, checking transactions is still a lot easier compared to using traveller’s check.

Vanita Gupta

I'm an content writer and content manager, I like to write and read about business, marketing, trading and investing. I have written a lot of quality content on funding successful do check them out.

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