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Video Blog: Debit or Credit?

Posted by Admin on 10/9/2015



You know that moment when you’re at check out and they ask “Debit or Credit”?

It can happen if your debit card has a Visa or MasterCard logo on it.

There’s actually quite a difference between processing it as a debit or a credit, and choosing the right one could save you some money.

So imagine, underneath the cash register, there are two sets of pipes.

One pipe goes straight to your account, and brings the money right back.

That’s how debit works.  The cash comes out of your account instantly. You could go online right then and check it.

But because the money comes out right away, What if there’s something wrong with your purchase… and you need to cancel it?  They’ve already got your money.

That’s why choosing credit is often the better choice.  When you select credit, the transaction goes through a whole different set of pipes, and gets protections along the way. Fraud protection, and easier refunds. 

Plus, when you chooses credit, you sign for the purchase instead of punching in a PIN and that’s safer.   All it takes is someone behind you in line with their smart phone to record your card number and PIN and they’re off to the races.

The protection that comes from choosing credit costs you nothing.  It does cost the merchant a bit more, so if you’re shopping at your Uncle Sal’s butcher shop, he might give you a look.

One drawback to choosing credit is—you won’t see the money come out of your account until the retailer bundles up their credit card charges and submits them.   It could be later in the day or the next day.  And if you need cash back... you’ll need to choose debit. 

Otherwise, sign for your purchases and enjoy a little extra peace of mind.

Do us a favor please. Tell your friends about us so they can be smart about their money too.

Topics: Consumerism, Credit Cards, Debit Cards

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Feel free to peruse about. Here you’ll find stories, posts and tools aimed to assist you as you’re faced with daily to once-in-a-lifetime financial quandaries. This is your SmartLab (lab coat optional). We want you to get the most from our articles, and we welcome your ideas to help us continue to bring valuable content to you. Check out the comment section at the bottom of every post for easy ways to share feedback. We’re learning, too, and what better way to encourage smarter banking than to share tips and resources with each other? Not to mention, it’s a great chance for us to get to know each other!

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