Does your debit card have a daily spending limit? Most likely, yes. A debit card spending maximum is set by the individual bank or credit union that issues the debit card. Some debit cards have spending capped at $1,000, $2,000, or $3,000 daily.
Try to spend more than the maximum allowed, and your debit card will be declined even if you have enough money in your checking account. Very embarrassing. There are, however, some steps you can take to deal with debit card spending limits.
Why worry about debit card spending limits?
It’s not every day you need to spend more than $1,000 on a debit card. But it happens. Especially if you don’t have or wish to use a credit card for major purchases, you may find yourself needing to pay a big car repair bill, book a vacation, or make another large purchase that will cost more than your debit card spending limit.
Daily limits are placed on your card for security reasons. This way your bank account won’t be drained of funds if theft or fraud occurs.
Ask your bank or credit union what your debit card limits are
Before you can deal with a debit card spending limit, you need to know what it is. A few banks publish this information on their websites or print the information on the paperwork that comes with your card.
If not, you’ll need to call up your bank or credit union or ask a teller the next time you’re in. Be sure to determine both your ATM cash withdrawal daily limit and your debit card spending limit. They’re different.
Typically, your cash withdrawal limit will be lower. Many banks set ATM withdrawal limits at $500 in a 24hour period. Sometimes it’s $1,000. Typically, your ATM spending limit will be higher. Also, ask your bank if ATM transactions count towards your daily spending limit. (If so, and you have a $1,000 total spending limit, when you withdraw $200 from an ATM you could not then make a $900 purchase on your card).
What’s your spending limit?
Your spending limit through your bank can vary by the type of account you have and your personal financial history. Nationwide banks like Bank of America, Schwab, US Bank, and Wells Fargo will speak to its customers about daily limits and possibly work with you to make adjustments.
But some large banks are very clear on their set limits, including:
| Bank | ATM daily limit | Debit daily spending limit |
|---|---|---|
| Ally Bank | $1,000 | $5,000 |
| Capital One | $600 – $1,000 | $5,000 |
| Chase | $500 – $3,000 | $3,000 – $7,500 |
| Citibank | $1,000 – $2,000 | $5,000 – $10,000 |
| Citizens Bank | $500 – $1,000 | Varies per person |
| Discover | $510 | Varies per person |
| HSBC | $500 – $1,000 | $3,000 – $5,000 |
| Morgan Stanley | Up to $1,500 | Up to $5,000 |
| Santander | $1,000 – $2,500 | $2,500 – $11,500 |
| USAA | $600 | $3,000 |
Ask to change your debit card spending limits
Most banks will increase debit card limits if you ask. This increase can be either permanent or temporary, with some raises only lasting for a 24 hour period, so make sure you find out ahead of time.
Also, be sure to find out when the increase will take effect. Sometimes it’s instantaneous, other times it may take 24 or 48 hours, so if you go to make a big purchase right after hanging up with the bank, the transaction may still not go through.
Credit vs. debit: is credit a good idea for you?
Alternatively, there are times when it is better to use a credit card than a debit card. If you have good credit or you would like to build up your credit history for use later on, applying for a credit card is a good idea. If you use your credit card responsibly, spending can actually create a positive credit history, making you a more likely candidate for approval on better cards in the future. Here’s when it’s a better idea to reach for a credit card than your debit card:
- If you are short on cash but will be getting more soon.
- If you need to make a purchase that can be broken up into monthly installments.
- If you are paying a lot of interest on a previous debt and wish to consolidate under a lower interest rate.
Of course, the one caveat to this is that you must use your credit card responsibly. This means paying at least your monthly minimum and not letting the interest accrue unnecessarily. If you can handle that, then a credit card is an excellent idea for you for several reasons, for example:
Credit cards help you build your credit
As I mentioned above, responsible credit card spending will actually build your credit and help you raise your credit score.
Cards like the Capital One Platinum Secured Credit Cardor the Capital One Platinum Credit Cardallow people with bad or no credit at all to start building their credit with responsible use. And building credit through these cards can take just a matter of a few months (and you may even get a credit line increase after just six months). Debit cards do not offer this type of advantage at all, no matter how long you’ve been a cardholder.
You can earn amazing rewards from credit card programs
Most credit cards today offer some sort of rewards program. These programs can often be highly lucrative, giving you real cash back, gift cards, and statement credits for the spending you are doing anyway. Even if you don’t have great credit, you can earn rewards with certain credit cards for people with poor credit.
Credit cards offer other benefits too
In addition to rewards points, credit cards offer valuable benefits including airport services, travel insurance and perks, and shopping advantages like extended warranty and purchase protection. Some cards will even give you welcome bonuses and special 0% APRs during your introductory period.
Credit cards are an emergency line of credit
While you may hope you’ll never need it, a credit card is a good emergency fund in case the need ever does arise. Whether it’s a medical emergency, an unexpected repair needed on your house, or a car part replacement that ends up costing you thousands of dollars you just don’t have, credit cards offer you the flexibility to stay covered in these unpredictable times.
Credit cards offer debt consolidation options
Another perk to credit cards is the introductory offers. Some will give you 0% APR for a limited amount of time. If you have debt or need to make a large purchase, this can save you hundreds or even thousands of dollars by canceling the interest payments for that introductory period of time.
Summary
Still using only your debit card for daily purchases?Debit cards can be great at times –and sometimes credit cards are a better choice (if you use them responsibly).
Or, you may even consider using a check to make larger purchases. While checks seem outdated compared to debit or credit cards, it makes sense to use themif you need to purchase something that exceeds your debit card limit. As long as the check will clear, there is no limit to how much you can spend with a personal check.
I'm a financial expert with extensive knowledge of banking, credit, and personal finance. My expertise is grounded in a comprehensive understanding of the intricacies of financial systems and products. I've closely followed the evolution of banking practices, including the issuance and management of debit cards, as well as the security measures implemented by banks to protect their customers.
Now, let's delve into the concepts presented in the article about debit card spending limits:
-
Debit Card Spending Limits:
- Daily spending limits on debit cards are set by the issuing bank or credit union.
- These limits are imposed for security reasons, preventing potential large losses in case of theft or fraud.
- The spending limits can vary between banks and even among different types of accounts.
-
Checking Your Limits:
- It's crucial to be aware of both the ATM cash withdrawal limit and the debit card spending limit.
- ATM withdrawal limits are often lower than spending limits.
- ATM transactions may count toward the daily spending limit.
-
Examples of Debit Card Limits:
- Different banks have different limits. Examples include:
- Ally Bank: $1,000 ATM limit, $5,000 debit spending limit.
- Capital One: $600 - $1,000 ATM limit, $5,000 debit spending limit.
- Chase: $500 - $3,000 ATM limit, $3,000 - $7,500 debit spending limit.
- Different banks have different limits. Examples include:
-
Adjusting Limits:
- Many banks allow customers to request an increase in their debit card limits.
- Increases can be permanent or temporary, and the timeframe for implementation varies.
-
Credit vs. Debit:
- Credit cards can be a better option in certain situations:
- When making large purchases that exceed debit card limits.
- To build credit history and potentially qualify for better cards in the future.
- When monthly installment payments or debt consolidation are needed.
- Credit cards can be a better option in certain situations:
-
Benefits of Credit Cards:
- Building credit history, which may lead to better financial opportunities.
- Rewards programs, offering cash back, gift cards, and other incentives.
- Additional benefits like airport services, travel insurance, extended warranties, and purchase protection.
- Emergency line of credit for unforeseen expenses.
- Debt consolidation options, including introductory 0% APR offers.
-
Summary:
- Debit cards have their advantages but may have spending limits.
- Credit cards offer various benefits and can be a valuable financial tool if used responsibly.
- Checks, though considered outdated, remain an option for purchases exceeding debit card limits.
In conclusion, understanding and managing your debit card spending limits, exploring credit card benefits, and considering alternative payment methods can empower you to make informed financial decisions.
