I handed him my debt card and the cashier asked if I wanted to charge it credit or debit. Is he insane?
A few years ago when I first got my debit card, I was confused whenever a cashier asked me whether I wanted to charge my card using credit or debit. Debit please, I always said, wondering whether those people recognized that it’s actually a bank card. Eventually, I found out that my debit card was capable of transactions through the credit card network as well. It would still draw money from my bank account though, so the only difference seemed to be just signing versus punching my pin.
My mom always said “anything related to money shouldn’t be seen in public”, so I started requesting for a credit transaction just in case someone saw me input my pin. Little did I know that I also:
- Added Fraud Protection – Credit transactions go through their respective network (Visa or Mastercard depending on the logo on your card), which has a zero-liability policy. Send the debit transactions without the credit card network and you could be liable for up to $500.
- Increased Reward Points – Some bank cards even let you accumulate reward points with your debit cards, but only if you use it through the credit card networks.
- Get No Cash Back – One of the great features of using a debit card is that you can take money out using the same transaction without any additional fees. Say credit and you don’t get the same convenience.
- Potentially Lowering the Merchant’s Margin – Bigger companies negotiate their credit and debit transaction fees, but smaller merchants who don’t have the same leverage may be charged more for credit transactions. Next time you use your debit card at a local store you want to support, consider saying debit.
Note that whether it’s a credit or debit with your ATM card, the money is still coming out of your bank account (so not 0% balance transfer credit cards by any stretch). Unless you opted out (assuming your bank even lets you do it), you will be charged with overdraft fees if your account doesn’t have enough money to cover your expense.
So what do you say when you hand over your debit card? Debit or credit?
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{ 10 comments… read them below or add one }
I think you make a good point about choosing carefully when you run your card as debit or credit. Normally, I choose credit, because of the protections and the concerns over entering my PIN. In my town, I actually use cash at many of the smaller vendors. It’s easier for them all around — and no transaction fees at all!
Generally it doesn’t make a difference, although the screen automatically tries to make you punch in your number, so you have to press cancel in order to use your card as a credit card. But that always scares me…’I just put my card back in my pocket. Will pressing cancel stop the entire transaction and mean I have to swipe my card again??’
“smaller merchants who don’t have the same leverage may be charged more for debit transactions.” You meant credit, right?
I haven’t tried pressing cancel, but I may try it sometime just to see!
If you want to sign for it, the cashier needs to specifically say that it’s a credit transaction (even though it’s still a debit card). Once you are asked to type in your pin, the cashier already pressed “debit”.
Yes I mean credit. Thank you for pointing it out and it’s been corrected.
My bank charges me $.25 for every debit transaction so I always use credit. As far as hitting ‘Cancel’, it doesn’t make you swipe your card again. If the difference in cost between debit and credit is going to make or break a company, then they are not going to be around long. This should already be factored into their business model.
I used to have a card with a 50 cent charge for each debit transaction. This was before I realized it could also be used as a credit card, and I closed the account. I’m glad I didn’t know at the time, though, the bank had no redeeming qualities.
If you bank charges $0.25 for each transaction, you should look for one that doesn’t (most don’t).
I’m not implying that some merchants need that cost to survive, but when small local businesses are thriving, that’s better for the economy than the big corporations getting all the money.
Never knew of the differences and I always thought the visa logo on my Wells Fargo card was stupid. It’s another way that those institutions muddy the water to confuse customers and profit.
I still don’t get the use of a debit card when you can use a credit card and get something out of each transaction.
Why carry cash, a debit card, and a credit card in your wallet?
The combo should be some cash, and one credit card, and that’s it. Keep it simple.
I never liked the idea of the debit card. Merchants being able to directly withdraw money from my bank account felt like a loss of control. What if an employee used my info to get money out of my account or they inadvertently cause a double charge (as happened when a gas station double billed my purchase)? At least with a credit card you can dispute a charge without worrying about lack of fund fees from the bank. Also, instead of a debit card I use old fashioned checks. I don’t use them often, but the gal who cuts my hair gets a check from me. And I use the check register to keep track of my balance.
Others live by the debit card. An ex used his debit card all the time, but he never kept track of his purchases. So if he wrote a check and it wasn’t cashed right away, he would end up with tons of overdraft charges.
So, it seems like a personal comfort level which dictates debit or credit.
“I still don’t get the use of a debit card when you can use a credit card and get something out of each transaction. ”
I only see two reasons:
1) the holder has one of those new high interest checking accounts that pay very high interest (4 to 5%) but require a certain number of debit transactions a month
2) the holder is a credit-aholic who doesn’t understand the difference between credit and spending money. I.e. if you and I look at the price tag of an item we like that costs say $100, we may think “this cost $100, it’s expensive” regardless of how many credit cards we have in our wallet. A credit-aholic thinks “oh, I can just charge it so I am not paying real money”. These people should probably stay away from cards or at least have a credit card cool off period so that they can develop some disciplilne, learn the value of money and get a clear idea of what they can or cannot afford.
But for those of us who do understand the value of money and know that borrowed money aren’t really our own, credit cards provide nice advantages. Also – there is this wonderful feature called “automatic payment of the full balance” that allows to combine debit card’s feature of having the money taken from your account with all the advantages of credit cards like grace period and the ability to actually check all of the purchases, check that all merchants delivered everything as promised before the money actually leave the account.