DECA+ Business Management and Administration Practice Exam

In a debit card transaction, where are funds transferred from?

1. The seller’s checking account

2. The cardholder's savings account

3. The cardholder's checking or savings account

4. The bank's operational fund

The correct answer is: The cardholder's checking or savings account

In a debit card transaction, the funds are directly withdrawn from the cardholder's bank account, typically their checking or savings account. This means that when a purchase is made using a debit card, the money is immediately deducted from the account associated with that card. This process reflects the primary function of debit cards, which is to provide a direct and convenient method for accessing the funds that the cardholder already has in their bank account. Unlike credit cards, where funds are borrowed from a line of credit, debit cards utilize the existing balance in the cardholder's accounts, ensuring that consumers can only spend what they actually own. The other options presented involve accounts or funds that are not directly debited in a transaction. For instance, the seller's checking account would not be involved in this transfer of funds, and the bank's operational fund is unrelated to individual transactions made by cardholders. As such, understanding that a debit transaction pulls directly from the cardholder's own accounts is essential in grasping how debit cards function within personal finance.