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Debit v. Credit: A Users' Guide

A check card can be run as either a “debit card” or a “credit card”. Not only are these terms confusing at times—since both options are funded through your checking account— but also the circumstances under which each option should be used can vary greatly.

The Debit Option

A debit card deducts the amount you’ve spent immediately from your checking account, like an ATM card you can use in a store. It’s always important to survey any ATM you use, in case of tampering by crooks looking to skim a PIN number, and it’s wise to decline the debit option for your first few visits to a new store until you have a strong sense of the merchant. It is a good decision to use the debit option for a gas station or a hotel that might place a substantial hold on a card run as credit to insure against a drive-off or miscellaneous charges in the room. These holds would prevent access to the money in your account until they’ve been lifted.

The Credit Option

Again, even if you are using a check card as a credit card, the funding source is still your checking account. The main difference comes from the way the cards are processed—immediately (debit) or a couple days later (credit).

Online, delivery, and big-ticket purchases should always be made with a credit card, as the credit card company who backs it (either Visa or MasterCard, typically) offers purchase protection in case of disputes or hackers. The same is true for a restaurant, where there is likely to be many people around, which makes typing your PIN more dangerous. Additionally, when booking future travel, renting something that requires a deposit, or setting up recurring payments, a credit card is a better bet so that your memory and/or math skills are not subject to overdraft fees.

How to Keep It Straight

Banks and credit unions offer online banking as a way to streamline your personal finances. Keeping up with your deposits and withdrawals is the best way to safeguard your accounts. But by watching your surroundings closely, it is easy to take extra precautions against theft, fraud, and circumstance.

Whether you select debit or credit when using your check card, you can find the best Interest Checking rates here on MyBankTracker