DECA+ Business Management and Administration Practice Exam

What does a debit card do?

1. Allows users to borrow money from a bank

2. Funds are electronically transferred from the cardholder's account

3. Provides a credit limit for purchases

4. Serves as a loyalty card for discounts

The correct answer is: Funds are electronically transferred from the cardholder's account

A debit card is a financial tool that allows users to access the funds they have in their bank accounts. It works by electronically transferring money from the cardholder's checking or savings account directly at the point of sale or when withdrawing cash from an ATM. This means that when a debit card is used to make a purchase, the exact amount is deducted from the user's available balance instantly. This is fundamentally different from options that suggest borrowing money or providing a credit limit, as a debit card does not offer credit or allow for going into debt. Additionally, while loyalty cards are often tied to discounts or special offers, they do not facilitate direct access to banking funds or account balances. Thus, the primary function of a debit card is its role in enabling direct and immediate access to the user's own funds.