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debit or credit
27 May 2019

How to Choose Between Debit or Credit at the Checkout Line

You’re at the store checkout counter, and you’re asked the same question you’ve been asked seemingly a million times before: “Debit or credit?”

Perhaps you’re always in the camp of those who choose debit. After all, you actually remember your PIN, so why not?

Or maybe you’re the type to always choose credit because you feel like it’s more secure.

Either way, do you know which option is truly the best? And what if both options are actually good ones in certain situations?

Here’s a rundown on how you can choose between debit and credit when you’re using your bank card for retail purchases.

Let’s get started!

Debit or Credit? Debit May Help to Save the Store Money

A merchant pays a fee each time you use your credit or debit card during a transaction.

This fee may depend on various factors, like the kind of store as well as the payment processor that the merchant uses. It also depends on the kind of credit card you’re using—for instance, a rewards card versus one that doesn’t result in rewards.

This fee doesn’t necessarily impact your wallet. However, your selection might save the store some money, so it doesn’t hurt to ask the merchant what choice they prefer their customers to make.

After all, if more customers made the “right” choice, the merchant may be more inclined not to pass on this extra cost to customers.

Debit May Speed Up the Transaction

If you decide to go with debit instead of credit, the information related to your transaction will be sent through a network for electronic funds transfers. This network depends on one transmission for authorizing, clearing and settling the amount of your purchase.

What does this mean for you? It means that your transaction will show up in your bank’s checking account immediately.

Meanwhile, if you go with credit, your transaction will go through the exact same network that a credit card uses. As a result, it could take multiple days for your transaction to finally be authorized and settled. During this time, you’ll notice that your transaction in your account will be pending.

If settling each of your transactions in your account in a timely manner is important to you, then you’d be wise to go with debit.

Credit Won’t Help with Building Credit

Naturally, you may assume that choosing credit will help you with building credit. The truth is, your card will still behave like any debit card, even though differences exist between signature and PIN transactions.

With these cards, there aren’t revolving balances. Instead, you are spending cash from your account rather than making a purchase on credit—in other words, borrowing money.

In addition, the account activity related to your card isn’t reported to credit bureaus. As a result, they will not appear on your current credit reports and thus won’t impact your credit score.

In light of this, the best way to start building credit is to open a true credit card. The best credit cards provide rewards programs and other benefits you may be interested in taking advantage of. Just be sure that you can pay your bills completely every month so that you don’t pay interest on purchases.

Also, if you’re planning to travel beyond United States borders, look for a credit card that doesn’t have a yearly fee. In addition, search for a card that doesn’t come with fees for foreign transactions.

Choosing the Credit Option May Provide More Benefits for You

A major benefit of going with credit when you make a purchase is that you may receive protection from your card network. For instance, you might assume no liability for any fraudulent purchase.

For instance, let’s say that you use your card to pay for lunch at a local bistro. The waitress decides to add a zero to your tip total, or perhaps your waiter swipes the card more than once accidentally.

The protection you receive against fraudulent purchases may help you to receive reimbursements for unauthorized charges.

In addition, sometimes debit cards feature rewards programs, although these are not very common. According to the card issuer, you might receive rewards only if you make a signature-based purchase with your card versus using your PIN.

Both Options Are Better Than These Two Options

Whether you decide to choose credit or debit, either of these methods is much safer than writing a check or using cash.

If you lose your check card, you’ll be covered for just about everything you have lost. Also, it’s simple to cancel your card and order a new one. However, if you happen to lose cash, you will likely never see that cash again.

The problem with checks is that other people can easily alter them. In addition, they are time-consuming to write in the store. And waiting for your check to be cashed can no doubt be annoying if you’d rather see your transactions settled right away.

How We Can Help

In addition to highlighting the top reasons for choosing debit or credit, we offer other top-of-the-line advice for those trying to navigate the complex world of personal finance.

For instance, you can find out about the many types of personal loans available today, including same-day loans and loans for bad credit. We also offer information about payday loans, including payday loans for those who prefer not to undergo credit checks.

We additionally offer tips regarding the best credit cards available on the market today, including department store and rewards cards.

Take a peek here to find out more about how we can help you to take control of your financial life. You could even get on the path to financial freedom in the months and years ahead. Here are some other articles you might find helpful:

Payday loans with a prepaid debit card – how to get one when you only have a debit card
Your guide to personal loans for Uber drivers
The best credit cards to build credit
Do you need a credit card? The answer is yes!