ProudToBeAChristianFruitcake@xanga left an interesting comment on Wednesday's "What Everybody Should Know About Their Checking Account" post. The comment said that, when a sales clerk asks you "Debit or credit?" you should always say credit, even if you're paying with a debit card. I looked into the issue, and an article on WiseBread agreed that answering "credit" is often better for the consumer. Why?
- Consumers have to sign for credit purchases, unlike debit, which only requires the four-digit pin. This gives the cardholder added security.
- Banks charge a higher fee from stores for credit charges than they do for debit, which is why stores want you to use debit. But card companies make credit purchases more appealing to us by offering reward programs.
But no matter what people are saying at the register, more consumers are paying with debit cards, according to an
article in
The Washington Post. Shoppers are anxious about their jobs, wobbly credit-card interest rates, and over-spending, all of which make debit cards an appealing alternative.
The fundamental difference between credit and debit cards is that with credit you are spending borrowed money, which you will have to pay back later (and, if you don't pay it right away, there will be interest). Debit cards, alternatively, draw money from your bank account, so there's no bill to pay later.
Debit cards have been becoming more widespread for years, but the recession has caused a spike in their popularity. This spring was the first time ever that consumers spent more with Visa debit than credit, according to
The Post.
Credit cards are often associated with big purchases like appliances, electronics, or jewelry, while debit cards are what people use for everyday expenses groceries and gas. And, if you look at America's spending habits, most of our money lately has been going to groceries and gas.
The only thing you have to watch out for with debit cards are overdraft fees—money some banks automatically charge consumers who overcharge their cards. The fine is usually about $35, but the issue is less about the fee and more that many spenders don't know to expect it; they think their card will just be declined when they spend beyond their balances. Congress is looking at passing a law to make banks ask customers before enabling overdraft protection, but some of the big banks, like Bank of America and Chase, have already enacted such practices.
If you do ever get charged for an overdraft fee, call the bank and see if you can get it dropped. I got PNC to remove one from my account once, since I was a first time offender.
Credit or debit: Which do you say? And how do you pay?
Comments (30)
I only have a debit card. However, I used them both ways, depending on how much time I have or how safe I feel punching in my pin.
I use my debit card, but say credit. Sometimes you get charged extra fees for using debit - don't know why. Plus, I get reward points when I use it as credit.
It all depends upon who your card issuer is and your bank. My bank offers the same protections as Visa does in regards to liability after the fact. Plus cashiers don't verify the person's ID or that the signatures match the back of the card, I know I just use a straight line on the machines, and I haven't been stopped/asked once. I would prefer to not have companies pass on the cost of those fees to me in the form of price increases, but I do like rewards programs.
@laytexduckie@xanga - Same here. I hate when people are so close, I can hear them breathing, so I'll just do credit.
@whitetrashpoet@xanga - Some stores do that to get more sales. What I fucking hate is when they tell you AFTER they give you the total & you say debit. I tell them forget it I can go to another store & most of the time I hear "oh ok, I'll let you this one time". I DO understand you have to pay a certain amount to the credit card companies for the use & all but they should have a sign VISIBLE by the register telling you there's a minimum.
I have debit, I plan to get credit to get a car, then pull a loan to get an apartment and use the credit card in case of an emergency. Once I upgrade from an apartment to an house, the credit card will be used as a last resort.
I like to use debit for most things (yet I always say credit because my bank has a .25 fee for using the debit feature--boo), most things but gas that is. I have a rewards MasterCard, so I use gas for that card and get miles for each dollar I spend. It's poetic, in a way.
I totally agree with the big purchases though. I make sure I have the money in the savings for it (if I can), but I'll always purchase air travel tickets or my laptop with a credit card. It's just easier.
I wouldn't do that to a mom&pop store :( Wouldn't the stores just increase their prices if they kept getting credit fees? idk...
And yes, credit requires signature, but on the paper receipts ANYBODY can sign it. For the electronic readers, I've fucked up my signature because I was holding heavy bags but it still went through and I didn't get a notification about my signature not matching. The register/clerk won't even know if it's really you or not, unless you get carded.
Eeh, the reward points are okay, but not that important to me since I'd have to buy a lot of stuff to get a reward. I don't spend a lot other than food and gas.
I use my debit card as a credit card. The money still comes out of my bank account so I'm not borrowing anything.
The reason I use it as a credit card is because most banks will CHARGE you a monthly fee for using it as a debit card.. look closely at your bank statement next timeI use debit because I'm still a teenager.
I only ever use debit. I have never had a credit card. I feel safer using my very own money.
My bank is pretty good about working with it's customers, and the fee is $25 at my bank, rather than $35. :p Which is good. But, I rarely have to worry about it, I keep track of things very well.
Credit Card all the way. I see them both the same, one way or another the money is coming out of your pocket. So why not get a little something (% cash back or rewards) for spending than nothing at all? Like a debit card, just keep track of all your credit purchases.. shouldn't be so hard.
Credit! Great rewards program!
The other thing you need to watch out for with debit cards is that, when you "pay at the pump" for gas, many gas stations/financial institutions will "pre-approve" you for a certain amount, often much higher than you end up spending on your gas. For instance, you may only buy $20 in gas, but the amount that is held aside from your account until the transaction is completed by the card company (which could be as long as 2-3 days) is $75. This may result in you not being able to use that extra $55 dollars that's being held aside for a couple days, and if you need it, it could put you in a bind. If you are concerned about this happening, I recommend either using your card inside to pre-pay for gas, or using cash. This is also the case with pre-paid Visa gift cards--something to watch out for when buying such a product as a gift or maybe in lieu of traveler's cheques.
Cash is probably what prevents people from going into unnecessary debt.
always debit. I don't sign my card so the cashier has to ask to see my ID.
I have managed to get MANY overdraft fees removed from my account :)
Most people I know who use credit at my place of business don't even sign. They just scribble on the screen. It's very hard to get a legitimate signature on those touch screens!
I pay with credit and say credit. I pay off my credit cards when I see them appear on my transaction list online. Also, I have credit cards that have rewards, so I prefer using them over my debit card.
read/listen to Dave Ramsey. then let me know how you feel...
I pay with credit and say credit. There's the cashback rewardss lol
"Credit" has more security than debit due to a signature being needed?
ANYone can forge a signature, with little to no difficulty or prior knowledge.
Many times my signature has been sloppier than if a forger had signed, and NO one contacted me regarding possible fraud of any kind. There simply aren't enough data analysts, human or computer, reviewing credit-card transactions in real-time to make credit ANY more "secure" than debit.
Much harder to falsify without prior knowledge is a PIN.
Four digits times ten possible numbers for each digit gives over 10,000 permutations.
Credit more secure than debit?
Say again, now, I'm hard-of-hearing.
My debit card has "VISA" written on it.. so I guess it counts as both? The store I work at dosen't take debit yet my card works. So I guess I'll never really figure it out.
DEBIT :)
I'm a debit person.
I don't get why people are so terrified of using credit cards. Yes, it's borrowed money, but if you have money in the bank to be using a debit card, then why not use a credit card and just pay it off electronically within the billing cycle of 30 days? They don't charge interest if you pay it off before the due date. If you distrust your own sense of restraint that much, then just tell the card company to limit your credit line to $500.
And even if you don't pay it all off right away, as long as you make more than the minimum monthly payments, you'll be building a good credit score. If you've got an APR of even something like 20%, then if you have an outstanding balance of, say, $100, you'll only be paying like $1.60 a month in interest.
Now, if you're a big enough idiot to get a credit card and max out the credit line, knowing full well you don't have that kind of cash and can't get that kind of cash... then maybe the first purchase you should make is to have your tubes tied/snipped.
I only have a debit card but sometimes I wish I had a credit card for emergencies.