Debit or credit?
Anytime your bank debit card is used you get asked the question, “debit or credit?” You may not realize it but there is big
difference between these two transactions. When a transaction is run as credit, the customer will be asked to sign the receipt for the
purchase. All signed credit transactions are processed through the credit card network that is associated with that card.
For example if a visa card is processed, tha transaction comes with the added security offered by the visa credit card company.
The security is offered with a large percentage fee charged to the merchant or vendor where the transaction is made.
When you choose debit, you’ll be asked for your PIN number. This purchase is then processed through a different electronic
payment bank system than a credit transaction. Debit networks do not offer liability protection offered by credit card
transactions. The store will not acquire the same fee that was assessed for the credit transaction; however your
bank may charge you for a debit transaction. Stores would rather you use the debit option. This is all very simple to understand
if you think; when you chose to run your bank card as debit you pay the fees. If you choose credit, the store pays the fees.
Cash back
If you live a busy lifestyle, your free time often may consist of many errands and stops to make.
If you find yourself needing to go to the store and would like to use you bank card but you also need to get some cash you,
getting cash back with your purchase might be in your interest. Many stores or gas stations will let you get cash back with a
pin based debit transaction. This option can be a time save if you need a little bit of quick cash. A cash back transaction
may be processed with the same fees as an ATM but it saves time and cuts down on the amount of times you need to swipe your card.
Example of times to use a credit card instead of a debit card:
- Online. If there is a problem with an online purchase, like if the item is out of stock or damaged, your
payment may be accepted without you item received. It could take time for the refund of the purchase to go back to your bank account
if you use a debit card. If for any reason you account number is compromised online the fraud won’t have access to your personal
bank information if you use a credit card.
- Big-ticket items. A credit card is safer when making a large purchase online or in store. Credit cards usually
offer the ability to make a dispute if there is a problem with the merchandise. Some credit cards will offer valuable
extended warranties for big ticket items like electronics. Unless your credit card is offering a no interest promotion on you
big ticket item, you should pay off the balance to avoid high interest fees.
- New customer. If you are a fist time customer you should use your credit card instead of your debit card.
With this practice you can see how the company is run, and how customers are treated. If the merchandise you buy isn’t what
you expect you won’t be out bucks from your bank account.
- Deliver later. If you make an online purchase or if the product is out of stock in store, you might get the option
to buy now and have the item you purchase delivered later. In this circumstance you should use your credit card. If you
use a debit card and the merchandise is delivered late or never shows up, you might have to wait awhile for a refund to be
placed back on your account.
Updated: January, 15 2012