debit or credit???

[jetnut]

What difference does it make???????

 

[FmrFreightDog]

Big difference.


First and foremost, if you use your card as a credit card, you are protected by a whole host of consumer laws designed to prevent fraudulent charges (i.e. you are only liable for $50 if your card number is stolen, etc...). If you use your card as a debit card you are, in essence, opening your entire checking account up to a merchant.

If you choose credit, the transaction is processed through Visa, Mastercard, whoever..... They, in turn, debit your checking account to cover the charge. As a debit card, the merchant directly debits your account.

I, for one, feel a whole lot more comfortable putting my trust in Mastercard than in Joe Bob's Gas and Go.

 

[Ailerongirl]

Neither really...when using your check card, both will come out of your checking account in the same amount of time. The difference is in the input on your end. If you use 'debit' you'll be expected to puch in your pin number....'credit' you will need to sign for. However, the added bonus of debit is that it's convenient when a store (say Wal-Mart) lets you do a debit, and you can get cash back instead of using an ATM.

Clear as mud?

 

[HawkDrvr]

FmrFreightDog has it right. One thing people overlook is that anytime you punch in your pin number it is in fact an ATM transaction and will be considered such by your bank. One of my former banks considered these out-of-network and I was charged fees for them.

My advice, use it as a credit card due to the inherent consumer protections involved.

 

[Ailerongirl]

Big difference.


First and foremost, if you use your card as a credit card, you are protected by a whole host of consumer laws designed to prevent fraudulent charges (i.e. you are only liable for $50 if your card number is stolen, etc...). If you use your card as a debit card you are, in essence, opening your entire checking account up to a merchant.

If you choose credit, the transaction is processed through Visa, Mastercard, whoever..... They, in turn, debit your checking account to cover the charge. As a debit card, the merchant directly debits your account.

I, for one, feel a whole lot more comfortable putting my trust in Mastercard than in Joe Bob's Gas and Go.

Well how's that for funny. Two answers...swinging both ways.

Fmrfreight dog is right..you are protected by more consumer laws if you use credit and your card is stolen...but for the most part if you card is stolen, how would anyone know your pin? (Apart from Joe Duma$$ who wrote it on the back of his card)

I do know that at work I have full access to all credit cards transactions processed through the computer, but even if you use debit, I don't have access to your pin number....it isn't recoreded on anywhere...only your card number and exp date. (And to put your mind at ease, that's only available on the store copy to which only mgmt members can access). I guess what I'm trying to get at is that if a merchant was to get your card, he'd probbaly have to be pretty tech savvy to get the pin....

 

[Vik]

Someone could write a book on this:

1) Debit : usually linked to your checking account and is basically a "secured" credit card. The limit on the card is secured by positive funds in your checking account. So if you have $500 in your checking account at Washington Mutual and WAMU's "Visa Check Card," you will have a VISA card with a $500 limit. If you spend $50, your checking account immediately drops to $450 and the limit on your card is now $450. Debit cards rarely require a credit check as you really aren't borrowing money / no credit is given.

2) Credit card : Requires a credit check. Basically, you get a credit card with a certain limit on it, say $500. You can spend upto $500 on it which is credit. This means you're borrowing that $500 until you pay it back to the bank. Credit is being extended to you. Now some credit cards have grace periods, so if you pay off the balance within X days, you don't have to pay any interest. If you carry a balance, you pay X% interest. Credit cards allow you to borrow money basically. So say you have a credit card with a $500 limit. You go to Store A and buy $500 worth of goods, you can pay it back a little at a time, say over the course of 4 months, or 6 months, etc.

Credit cards also reflect on your credit report and can positively or negatively influence that score.

A great site is www.bankrate.com for a lot of good detailed information.

I personally don't use a debit card. I use credit cards because I'm constantly looking to keep my credit score high because I take out loans all the time. Credit reports and credit scores are a whole other ballgame, but hopefully you understand the diff between debit and credit.

 

[AFELLOWAVIATOR]

I get 1/4% back once a year for all my credit transactions on my check card. USBank..

 

[chperplt]

Afellowaviator... Nice to you see you out of the penalty box!!

 

[AVI8V1]

From a merchant's perspective:

A debit card weighs in as a far superior payment choice. With a debit card, the transaction will not go through if there isn't funds in the customer's account. There is no float, therfore there is less risk. The cash is pulled from the customer's account and put in Mr. Merchant's account. This lesens the possibility of the merchant receiving the dreaded chargeback from the processor. To add, merchants don't have to pay points or a percentage of the transaction like with the credit card. Its a simple transaction fee charge of around 25 cents.

On the other nad, a credit card is less advantageous for Mr. Merchant. First of all, he has to pay a percentage of the transaction (@1.59-1.8%, closer to 3.00% for AMEX) plus pay around 25 cents for each transaction. So on a $10 transaction, the effective rate that the merchant is giving up to the card host is in the area of 1.84-2.05% (non-amex). The effective rate gets lower as the transaction price increases as the 25 cents represents less and less of the total transaction. That's why some places require a minimum checkout amount to use credit. The transaction fee hurts on low average tickets. Plus credit runs the risk of a chargeback that takes a lot of time and effort to clear up.

 

[Bluto]

You said "...on the other nad." hehe

 

[Gulfstream 200]

Debit cards are for soccer moms and regional pilots who micromanage thier $65 allowances.

Real dudes carry a fat wad of cash and an AMEX card (best point program)

chiks dig cash.

...

 

[CRJ puppy]

Perhaps you should actually read and become familar with your particular bank's policies and procedures (and differences) regarding debit versus credit. As has been said thousands of times before, "...an educated consumer is our best customer..."


Enough said.

 

[jetnut]

I just wish the people at the registers would stop asking thats a tough decision to make debit or credit...

 

[Clyde]

What difference does it make???????

A steak dinner at market price, or one financed at market price. Personally, I don't use credit cards. The debit card forces you to try and stay within the bounds of how much cash you have on hand and spend accordingly. The credit card will allow you to get into as much debt as you please.

 

[sweptback]

A steak dinner at market price, or one financed at market price. Personally, I don't use credit cards. The debit card forces you to try and stay within the bounds of how much cash you have on hand and spend accordingly. The credit card will allow you to get into as much debt as you please.

Only if you're stupid.

A credit card is great if you have an interest-bearing checking account (most are not). You then earn interest on the money you spent until you pay the bill at the end of the month.

I've never carried a balance, and while there were times I was pissed at myself for running up a thousand dollars on my credit card, it always got paid off. Carrying a balance is just stupid if you can prevent it (now, there are times you can't prevent it, but overspending your means is not one of them).

I had a friend who always used a debit card through high school and college. When it came time to get in the real world, he didn't have any credit history and therefore got raped on everything pertaining to credit.

The other thing, don't ever cancel your first credit card. Even if it has 25% interest and no extra features. Just cut it up and never use it again, but don't cancel it. Your credit report is partly based on the average age of credit extended to you, and having an old card helps you.

 

[chperplt]

Not talking about credit cards here.. Talking about using your debit card as either an "ATM" card or a credit card.

 

[tittyjet]

check it out... www.clarkhoward.com

 

[Clyde]

Only if you're stupid.

A credit card is great if you have an interest-bearing checking account (most are not). You then earn interest on the money you spent until you pay the bill at the end of the month.

I've never carried a balance, and while there were times I was pissed at myself for running up a thousand dollars on my credit card, it always got paid off. Carrying a balance is just stupid if you can prevent it (now, there are times you can't prevent it, but overspending your means is not one of them).

I had a friend who always used a debit card through high school and college. When it came time to get in the real world, he didn't have any credit history and therefore got raped on everything pertaining to credit.

The other thing, don't ever cancel your first credit card. Even if it has 25% interest and no extra features. Just cut it up and never use it again, but don't cancel it. Your credit report is partly based on the average age of credit extended to you, and having an old card helps you.

I agree. However, the majority of the population will start out with that mentality that they will pay off the balance each month, but few ever do. You and I are in the minority of having the sense not to carry a balance from month to month.

Regarding your friend, what did he try to purchase with credit. The reason I'm asking is becuase there are other ways to build credit without putting yourself in debt. For example, if you rent an apartment and are not late with the payments, that will be a positive reflection on your credit report.

 

[sweptback]

Regarding your friend, what did he try to purchase with credit. The reason I'm asking is becuase there are other ways to build credit without putting yourself in debt. For example, if you rent an apartment and are not late with the payments, that will be a positive reflection on your credit report.

He had no rental history to speak of (lived with folks and at college), and had all kinds of trouble getting cell phones, utilities, etc. set up.

 

[sweptback]

The debit card I carry has the Visa logo on the front and therefore you are covered as if it were a credit card. In case you think I am mistaken, this was confirmed when I got the card as I had the same concerns as the original poster.

Yes, but only if you use it as a credit transaction.

If you use it by punching in your PIN, it's most likely handled by the policies of the issuing bank, which may vary wildly.

 

[squall line]

If you don't have a credit card, I suggest getting one. The key is to pay off the balance each month. Just like previous posts, it helps establish a credit history. One thing I just realized recently is that my auto insurance rates through Progressive are influenced by my credit score!!! The better credit score, the less I have to pay for insurance premiums. I also recently had my credit checked when I moved and had my power hooked up. If you have a good credit history, you don't have to pay a deposit for power.

Keep in mind though that your credit score is "dinged" each time you request credit. That means each time you sign up for a new credit card, sign up for a new wireless phone plan (with a new carrier) etc, your score suffers a hit. Get a single credit card (many cards won't necessarily help you) and get the highest limit they will allow. The more credit a company is willing to offer you is a good thing.

Just my 2 cents. I've been working on improving my score for years now and appreciate any new tips. I watch Suze Orman's show on CNBC quite a bit.

SL

 

[igneousy2]

I've pulled my credit history from all three major companies, I have had wireless acounts with 3...now 4 different wireless companies, I have lived in 4 different apartments in the last 5 years and I have seen ZERO indication about this on my credit report aside from my recent addresses. As far as I can see, as long as you have no colletions, renting apartments and/or getting a cellphone won't help/hurt your score if you have no credit.

As far as getting new credit cards, it only has a temporary effect on your score, if you get a bunch of new cards at once your score will go down. But over time, if you show that you can have the credit without using it your score will go back up.

Using your credit cards even if you pay off the balance can hurt you. The credit card companies report your balance on a given day and they do not report the fact that you may or may not have paid the entire balance off at the end of the month. The more important number is the percentage of revolving credit you are using, so if you have a $1000 credit limit, and used it to buy a new pool table on the first, the credit card company reported your balance as $1000 out of a $1000 credit limit on the 5th and then you paid off the balance at the end of the month the credit report pulled would not reflect that fact until the next time the company reported your account info which for some banks happens QUARTERLY. If by that time you charged another $1,000 dollars on your card, it would still look like you had a $1,000 balance. If you tried to buy a car, or get a cell phone, your score will be lower because as far as the credit company is concerned you have used 100% of your available revolving credit and people that have maxed out lines of credit are more likely to default than people with unused lines of credit.

This is why you should never use more than 30-50% of your available credit regardless of your intent to pay off the balance.

There are whole books on this subject.

http://www.thestreet.com/_yahoo/funds/annperry/10191534.html?cm_ven=YAHOO&cm_cat=FREE&cm_ite=NA

Later