Future Business Leaders of America (FBLA) Accounting Practice Test

What does a debit card do?

1. Increases the credit limit of a checking account

2. Automatically deducts the amount of a purchase from the checking account

3. Allows for cash withdrawals without fees

4. Enables borrowing against future income

The correct answer is: Automatically deducts the amount of a purchase from the checking account

A debit card functions by automatically deducting the amount of a purchase directly from the user's checking account at the moment the transaction occurs. This mechanism allows for immediate access to available funds, which is a primary feature that distinguishes debit cards from credit cards. When a purchase is made using a debit card, the financial institution processes the transaction in real-time, ensuring that the account holder does not spend more than what they have in their account. This direct deduction feature streamlines the payment process and often provides a convenient alternative to carrying cash. It is also important to note that using a debit card does not incur interest charges, as is the case with credit cards, because the funds are sourced directly from the account balance.