Debit Card Credit Card Option

[questions]

I was wondering about what happens when you decide to use a debit card with the credit option when making a purchase? Are there any issues that I need to be aware of and which option is better to use?

[Coleroo]

There is really no difference on your end. I've had companies around here use the credit option many times and I see no changes other than I had to sign a slip (as opposed to type my pin). The only difference i can think of is if you have one of those banks or stores that charge extra for using one kind over the other (I've never enountered one - just heard of them).

[mekish]

it shouldn't make a different to you as a consumer, although a merchant would rather you pay with a credit card because they get charged extra for debit cards.

[Aleta]

My husband doesn't necessarily like the idea of a debit card. Our bank told him just to use the credit option and that's safer. Many people don't like putting their pins out there and you have to sign for it. I never knew the difference before either until recently.

[poundwise]

Originally Posted by mekish

it shouldn't make a different to you as a consumer, although a merchant would rather you pay with a credit card because they get charged extra for debit cards.

This is not entirely accurate. Transactions that are run as "credit" (signature based; whether with a credit or bank issued, VISA/MC logo debit card) cost the merchant MORE than transactions that are "debit" (requiring a PIN).

This article addresses some of this:

Stores like PIN-based sales, but banks prefer signatures - The Boston Globe

Also, if you Google "credit card vs debit card" and/or "credit debit signature PIN" you'll find a lot of information.

[poundwise]

Originally Posted by Coleroo

There is really no difference on your end.

This is also not entirely accurate. A credit card or a debit card with a VISA/MC logo used as credit (i.e. - signature) has certain protections offered by VISA/MC and/or the issuing institution that do not apply or do not necessarily apply if you use a debit card with a PIN.

Note this article which addresses this difference:

Debit-Card Smarts - Kiplinger.com

Also, this article further indicates the preference of the banks to have you sign and the preference of the merchant to have you use a PIN and other issues. This article, in particular, is quite good overall IMO.

[kv968]

Originally Posted by poundwise

This is not entirely accurate. Transactions that are run as "credit" (signature based; whether with a credit or bank issued, VISA/MC logo debit card) cost the merchant MORE than transactions that are "debit" (requiring a PIN).

This is true. I've even used my debit cards at some places where after you swipe it, the reader gives you the option of "credit" or "debit" and even if you choose credit, the PIN screen still pops up.

[Aleta]

So what happens after your pin screen shows up?

[JasonEngler]

The TRUTH about Debit vs Credit when swiping your card associated to your checking account.

1. When you select credit it goes through the Visa/Mastercard network and the merchant is charged a fee.

2. When you select credit, a hold is placed on your checking account for up to 3 business days until the transaction is cleared (the merchant presents proof of transaction via signed recipt)

3. When you select credit, you must sign a receipt, depending on the amount of the purchase. I've noticed some large retailers will not make you sign for any purchases under $25.

4. When you select Debit, your checking account is automatically debited for the full amount of the transaction. The merchant is charged a small fee by the bank (usually much less then what Visa/Mastercard charges).

5. You should not be charged by your bank for selecting either Debit or Credit at checkout. If you are being charged, I recommended researching a new bank.

Ever notice that you are usually prompted for your PIN, rather then for Credit? This is mostly because the fees a merchant has to pay the bank (for using PIN) is usually much less then that of Visa/Mastercard.

Bottom line? Credit or Debit will suffice. Either way the money will be deducted from your account.

NOTE: Use credit and some banks will offer you incentive for do so. Chase/JPMorgan and NationalCity are two banks that have such programs.

Hope this helps!