Can You Put a Payday Loan on a Debit Card?

Small loans that are issued on a short-term basis at a high rate of interest are sometimes called "payday" loans. Typically, before you take out a payday loan, the lender will require that you offer some form of payment, either a post-dated check or an account number, that can be used to secure payment went the note comes due. A debit card can be used to pay back the loan in several ways.

Issuing Loans

Before a lender issues a payday loan, he will generally require that you provide both one or more forms of identification and a method of payment. A debit card is a card that draws money from a checking account. If you wish to have the lender withdraw money from this account when the loan comes due, you will generally not provide him with the debit card number, but with the account number for the checking account from which the debit card draws funds. Theoretically, though, a lender might allow you to provide a debit card number, if your debit card marked with a credit card company symbol, allowing user to make credit transactions on it.

Withdrawal

When the loan comes due, the lender will use this bank account number to take money out of the account or cash a post-dated check issued from this account. The lender will not do this with a debit card, because debit cards must be available for money to be withdrawn from the account. Because the borrower will not physically be with the lender when the money is withdrawn, he will not be able to provide him with a debit card to perform the transaction.

Early Payment

In lieu of withdrawing money from your checking account, many lenders will allow you to pay back the loan in advance in person. This is done by appearing at the lender's office and paying the money back in cash. Some payday lenders may also allow you to pay the loan back early with a debit card.

Considerations

While many payday loan facilities are equipped to process debit cards, this is not assured. Some businesses may only allow customers to pay in the form of cash or by writing a check. In this case, the borrower may wish to use the debit card to withdraw money from an ATM or to simply write a check from the account that the debit card draws from.