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.
Key Points
• An ATM card provides access to bank accounts for transactions such as cash withdrawals and balance inquiries, but cannot be used for purchases like a debit card.
• Introduced in the late 1960s, ATM cards have largely been replaced by debit cards, which offer additional functionalities, including the ability to make purchases.
• Using an ATM card allows for convenient banking outside of regular hours and helps limit spending since it can’t be used for purchases.
• Security measures for ATM cards include keeping the card secure, protecting the PIN, and regularly monitoring account activity for unauthorized transactions.
• Alternatives to ATM cards include debit cards, credit cards, prepaid cards, and mobile payment apps, each offering varying levels of functionality and convenience.
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 While they’ve largely been replaced by debit cards, banks still issue ATM-only cards for some checking and savings accounts.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.
Get up to $300 when you bank with SoFi.
No account or overdraft fees. No minimum balance.
Up to 4.30% APY on savings balances.
Up to 2-day-early paycheck.
Up to $2M of additional FDIC insurance.
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.
Interested in opening an online bank account? When you sign up for a SoFi Checking and Savings account with direct deposit, you’ll get a competitive annual percentage yield (APY), pay zero account fees, and enjoy an array of rewards, such as access to the Allpoint Network of 55,000+ fee-free ATMs globally. Qualifying accounts can even access their paycheck up to two days early.
Better banking is here with SoFi, NerdWallet’s 2024 winner for Best Checking Account Overall.* Enjoy up to 4.30% APY on SoFi Checking and Savings.
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.
Photo credit: iStock/Milan Markovic
SoFi members with direct deposit activity can earn 4.30% annual percentage yield (APY) on savings balances (including Vaults) and 0.50% APY on checking balances. Direct Deposit means a recurring deposit of regular income to an account holder’s SoFi Checking or Savings account, including payroll, pension, or government benefit payments (e.g., Social Security), made by the account holder’s employer, payroll or benefits provider or government agency (“Direct Deposit”) via the Automated Clearing House (“ACH”) Network during a 30-day Evaluation Period (as defined below). Deposits that are not from an employer or government agency, including but not limited to check deposits, peer-to-peer transfers (e.g., transfers from PayPal, Venmo, etc.), merchant transactions (e.g., transactions from PayPal, Stripe, Square, etc.), and bank ACH funds transfers and wire transfers from external accounts, or are non-recurring in nature (e.g., IRS tax refunds), do not constitute Direct Deposit activity. There is no minimum Direct Deposit amount required to qualify for the stated interest rate. SoFi members with direct deposit are eligible for other SoFi Plus benefits.
As an alternative to direct deposit, SoFi members with Qualifying Deposits can earn 4.30% APY on savings balances (including Vaults) and 0.50% APY on checking balances. Qualifying Deposits means one or more deposits that, in the aggregate, are equal to or greater than $5,000 to an account holder’s SoFi Checking and Savings account (“Qualifying Deposits”) during a 30-day Evaluation Period (as defined below). Qualifying Deposits only include those deposits from the following eligible sources: (i) ACH transfers, (ii) inbound wire transfers, (iii) peer-to-peer transfers (i.e., external transfers from PayPal, Venmo, etc. and internal peer-to-peer transfers from a SoFi account belonging to another account holder), (iv) check deposits, (v) instant funding to your SoFi Bank Debit Card, (vi) push payments to your SoFi Bank Debit Card, and (vii) cash deposits. Qualifying Deposits do not include: (i) transfers between an account holder’s Checking account, Savings account, and/or Vaults; (ii) interest payments; (iii) bonuses issued by SoFi Bank or its affiliates; or (iv) credits, reversals, and refunds from SoFi Bank, N.A. (“SoFi Bank”) or from a merchant. SoFi members with Qualifying Deposits are not eligible for other SoFi Plus benefits.
SoFi Bank shall, in its sole discretion, assess each account holder’s Direct Deposit activity and Qualifying Deposits throughout each 30-Day Evaluation Period to determine the applicability of rates and may request additional documentation for verification of eligibility. The 30-Day Evaluation Period refers to the “Start Date” and “End Date” set forth on the APY Details page of your account, which comprises a period of 30 calendar days (the “30-Day Evaluation Period”). You can access the APY Details page at any time by logging into your SoFi account on the SoFi mobile app or SoFi website and selecting either (i) Banking > Savings > Current APY or (ii) Banking > Checking > Current APY. Upon receiving a Direct Deposit or $5,000 in Qualifying Deposits to your account, you will begin earning 4.30% APY on savings balances (including Vaults) and 0.50% on checking balances on or before the following calendar day. You will continue to earn these APYs for (i) the remainder of the current 30-Day Evaluation Period and through the end of the subsequent 30-Day Evaluation Period and (ii) any following 30-day Evaluation Periods during which SoFi Bank determines you to have Direct Deposit activity or $5,000 in Qualifying Deposits without interruption.
SoFi Bank reserves the right to grant a grace period to account holders following a change in Direct Deposit activity or Qualifying Deposits activity before adjusting rates. If SoFi Bank grants you a grace period, the dates for such grace period will be reflected on the APY Details page of your account. If SoFi Bank determines that you did not have Direct Deposit activity or $5,000 in Qualifying Deposits during the current 30-day Evaluation Period and, if applicable, the grace period, then you will begin earning the rates earned by account holders without either Direct Deposit or Qualifying Deposits until you have Direct Deposit activity or $5,000 in Qualifying Deposits in a subsequent 30-Day Evaluation Period. For the avoidance of doubt, an account holder with both Direct Deposit activity and Qualifying Deposits will earn the rates earned by account holders with Direct Deposit.
Members without either Direct Deposit activity or Qualifying Deposits, as determined by SoFi Bank, during a 30-Day Evaluation Period and, if applicable, the grace period, will earn 1.20% APY on savings balances (including Vaults) and 0.50% APY on checking balances.
Interest rates are variable and subject to change at any time. These rates are current as of 10/8/2024. There is no minimum balance requirement. Additional information can be found at https://www.sofi.com/legal/banking-rate-sheet.
SoFi® Checking and Savings is offered through SoFi Bank, N.A. ©2024 SoFi Bank, N.A. All rights reserved. Member FDIC. Equal Housing Lender.
The SoFi Bank Debit Mastercard® is issued by SoFi Bank, N.A., pursuant to license by Mastercard International Incorporated and can be used everywhere Mastercard is accepted. Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
Financial Tips & Strategies: The tips provided on this website are of a general nature and do not take into account your specific objectives, financial situation, and needs. You should always consider their appropriateness given your own circumstances.
Third-Party Brand Mentions: No brands, products, or companies mentioned are affiliated with SoFi, nor do they endorse or sponsor this article. Third-party trademarks referenced herein are property of their respective owners.
Disclaimer: Many factors affect your credit scores and the interest rates you may receive. SoFi is not a Credit Repair Organization as defined under federal or state law, including the Credit Repair Organizations Act. SoFi does not provide “credit repair” services or advice or assistance regarding “rebuilding” or “improving” your credit record, credit history, or credit rating. For details, see the FTC’s website .
SOBK-Q224-1883065-V1
Source: sofi.com