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'Credit or Debit?' Purchase Differences to Know So You Master the Checkout

Everything to consider when selecting debit or credit at checkout.

Have you ever been at a store register to pay for something, handed the clerk your debit card, and been asked, "Debit or credit?"


Though the card you provided may be easily distinguishable, you are still given an option in how you prefer the charge from your bank card to be processed. Whichever you pick, funds will be directly taken out from your account, but the way you verify your identity will change, and so will the speed at which your payment is deducted from your account.

1. When you use your bank card as a debit card, you will be asked to enter your personal identity number (PIN) and your funds will go through the PIN networks (Star, Purse, or Interlink). Your funds will be deducted from your account immediately.

2. If you select credit, you will be asked to verify the transaction with your signature, and your funds may not instantly be removed from your account. It all depends on how the merchant processes credit card transactions. Many stores often do what is called "batching," running all credit transactions at the end of the day. Once the batching is finished, it takes a day or two for the credit transaction to process.

3. Wondering whether you'll get rewards? Typically, only purchases processed as "credit" will earn you rewards, so selecting "debit" won't. Since the rewards come from the issuing credit card company, you'll only be rewarded for transactions that clear through their networks. 

4. If you're looking to get cash back with your purchase, you can only do so by selecting the "debit" option.

5. If you're shopping at a local mom-and-pop store, select "debit" as a courtesy to them -- merchants are charged a fee for card transactions run as credit.

6. Both options cover you under the Electronic Funds Transfer Act, which provides protection to both signature-based and PIN-based debit transactions. If you lose your debit card and call your issuer within two days, you'll only be liable to pay $50 of fraudulent charges. If you call within 60 days, you're liable for up to $500, and after that point, you could be liable for all the purchases.

Which do you choose when you're at the checkout?

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