Debit or Credit? I still dont know the difference...

Spot In The Sky

Why would I choose one over the other? What is the difference? Everytime i ask the clerk they can't give me a straight answer. I know there are some educated people on the board...

HOOKER

..lets wait for the educated people to post here.

: waiting :

mca47

Debit: Comes directly out of your bank account.
Credit: Takes longer to come out of bank account.



They don't know just by looking at your card in your hand what kind it is so they have to ask.

chime

Debit: Paying with your own money which comes directly out of your bank account
Credit: You are being loaned money be the credit card company that you then have to pay back with interest (unless you pay off the balance at the end of each month)

LikeAnOcean

Wow.. Credit is money you borrow through a credit card company and have to pay back, sometimes with interest.. Debit gets, well debited directly from your bank account.. do you really not have a checking account or a credit card???

Spot In The Sky

Chime wrote:

Debit: Paying with your own money which comes directly out of your bank account
Credit: You are being loaned money be the credit card company that you then have to pay back with interest (unless you pay off the balance at the end of each month)

So its not taken out immediately if I use debit? Well what if i have $0 and I do a credit, i wouldnt be able to make the purchase, so its not like they are lending me the money, right?

DeLukin

The primary difference between debit and credit is in the way that the transactions are processed. When you run your bank card as a debit card, you will be asked to enter a personal identity number (PIN), and the funds are removed from your account instantly. When you select a credit option, the transaction is verified with your signature, and the funds may not be removed from your account right away, depending on how the store processes its credit card transactions. Many do what is known as “batching,” meaning that all of the credit transactions are run in a batch, typically at the end of the day, and it may take several days for your credit transaction to clear.

From the point of view of the merchant, the difference between debit and credit is typically a fee. Smaller companies may be charged less by the companies which process their card transactions for running cards as debits, so if you are visiting a small, locally owned business, you may want to consider selecting the debit option as a courtesy. In both cases, the store will get the money for the transaction, so both credit and debit transactions are protected from that point of view. This difference between debit and credit may not be important to you, and it doesn't apply to all merchants, as some stores negotiate deals with equal fees for debit and credit.

For you, the difference between debit and credit is actually quite significant. Typically debit transactions have a daily limit, for example, so if you are making a large purchase, it may not go through when you try to use your card as a debit card. In addition, banks handle disputes involving debit and credit transactions differently.

When you use a bank card as a credit card, you are protected from liability by the same laws which protect credit card users. If someone steals your card and you report it, you will not be liable for their credit transactions, for example. You can also take advantage of the credit card company's mediation process to handle any merchant disputes you may have.

When you run a bank card as a debit card, you are potentially less protected than if you run it as a credit card. If your card is stolen and you report it promptly, for example, you may not be held liable for transactions, but if more than a few days elapses, you may find yourself forced to pay these charges. You must also use the bank to mediate disputes with merchants, which can result in varying degrees of success, depending on your bank.

http://www.wisegeek.com/what-is-the-difference-between-debit-and-credit-when-i-use-my-bank-card.htm

Spot In The Sky

LikeAnOcean wrote:

Wow.. Credit is money you borrow through a credit card company and have to pay back, sometimes with interest.. Debit gets, well debited directly from your bank account.. do you really not have a checking account or a credit card???

I know what the words mean, I do accounting things, but when it comes to my bank/atm card, i dont know why i would chose over the other.

chime

Spot In The Sky wrote:

So its not taken out immediately if I use debit? Well what if i have $0 and I do a credit, i wouldnt be able to make the purchase, so its not like they are lending me the money, right?

It is taken immediately if you use a debit card.

If you have $0 in your bank account your debit card would get declined.

Your credit card would have a maximum amount you are allowed to borrow.

duggro

Spot In The Sky wrote:

So its not taken out immediately if I use debit? Well what if i have $0 and I do a credit, i wouldnt be able to make the purchase, so its not like they are lending me the money, right?

if there's no money in your account or no overdraft facility, then your debit card will be declined, as it needs to be authorised immediately

LikeAnOcean

Spot In The Sky wrote:

i dont know why i would chose over the other.

If you have money in your checking, you'd use debit. If you want to borrow the money and possibly pay it back with interest on a later date, you'd choose credit.

just tina

i think she is saying that when she uses her DEBIT card to make a purchase, she is sometimes asked "debit or credit?" even though she is handing them a "debit" card.... is that right?

i think it is just a matter of how they process it. either way it has to come out of your bank account, so if the funds aren't there, the purchase isn't being made. there is no credit or loan.

Zanne

Debit: Scares me.. harder to get back in the event of an issue with the purchase.. for example, when I booked flights to the EV West coast shows on ATA airlines and they went bankrupt the day before I was supposed to fly... Should I have used debit, I would be SOL in getting my money back. I used credit and blocked the charge with Amex.

Credit: More protection on purchases, usually includes things like rental car insurance (depending on which type of card you have) and other benefits that debit does not. Please see the above reference to a flight booked in April regarding "protection".

Peace

blackredyellow

Zanne wrote:

Debit: Scares me.. harder to get back in the event of an issue with the purchase.. for example, when I booked flights to the EV West coast shows on ATA airlines and they went bankrupt the day before I was supposed to fly... Should I have used debit, I would be SOL in getting my money back. I used credit and blocked the charge with Amex.

Credit: More protection on purchases, usually includes things like rental car insurance (depending on which type of card you have) and other benefits that debit does not. Please see the above reference to a flight booked in April regarding "protection".

Peace

I agree... and depending on your bank, you may be charged a fee for using it as a "debit". My old bank charged like $0.50 for each debit transactions (kind of like withdrawing money at another bank's ATM). Basically, you are paying for the transaction, not the store (who pay a small percentage for all credit sales).

know1

Where it gets confusing is when you use your bank card as a credit card. I prefer to use the bank card and essentially pay in cash for each transaction, but since they typically charge a fee when you choose "debit", I will choose the credit option. Then there is no fee and the money comes out of the account usually within 24 hours.

you are

i didn't read all of the above but here's my 2 cents -

a debit card, that you get from your bank, can be used as debit or credit. the advantage of debit is you can use it as an ATM when you are paying for things.


credit is where you borrow money. when you swipe your credit card, it's not technically paid for, you'll have to pay later....PLUS interest.

i don't have credit, but i can use my debit card as a 'credit card' when ordering things online....

you are

Spot In The Sky wrote:

I know what the words mean, I do accounting things, but when it comes to my bank/atm card, i dont know why i would chose over the other.

oh, i see this now

i don't know, but me personally, i usually always use debit, unless i've got some freak standing really close to me....as if he/she could find out my PIN number. if that's the case, i just run it as credit....or if i don't feel like punching the numbers. or if i don't want to sign i use debit.

basically it depends on my mood

wow, i sound smart....:rolleyes:

sponger

I remember what my accounting professor once said back in college when I was working on my undergraduate degree in acccounting.

He said, "Just remember that Debit means left and Credit means right."

For all you accountants out there, you know what he meant.

And, for the record, he wasn't some cheeseball professor with kooky sayings. He is a contributor to the Keiso & Weygandt textbooks and has personally mentored several FASB board members.

the wolf

know1 wrote:

Where it gets confusing is when you use your bank card as a credit card. I prefer to use the bank card and essentially pay in cash for each transaction, but since they typically charge a fee when you choose "debit", I will choose the credit option. Then there is no fee and the money comes out of the account usually within 24 hours.

we have a winner.

this is why i choose credit when using my bank check card. some places charge you up to 1.75 if you choose debit, at least with my bank.

so i choose credit. also , somtimes it takes a few days to come out of your checking account if you choose credit. so you can kinda play the system the a day or two b4 payday!

LeilaMoonTurtle

correct

also some banks give u points or mile or stuff for using credit

mainly cuz they charge the business for using the credit line

mca47 wrote:

Debit: Comes directly out of your bank account.
Credit: Takes longer to come out of bank account.



They don't know just by looking at your card in your hand what kind it is so they have to ask.

chime

Ah ignore my posts. Obviously all different on this side of the pond

Over here a debit card is a debit card and a credit card is a credit card. None of this using your debit card as a credit card malarky.

Also we don't get charged for paying by debit card or for taking money out of other banks ATMs.

A very few websites here do charge for processing transactions and this will generally by 2 to 3 times more for a credit card than a debit card.

Heineken Helen

Chime wrote:

It is taken immediately if you use a debit card.

Mine isn't :( well it is but if I check my balance it still shows the amount as being there... even though if I try to take it out it will say 'insufficient funds'. It takes a few days to show on the balance so it can be confusing.

i'm sure dunk will tell me I'm wrong though :rolleyes:

Heineken Helen

Chime wrote:

Ah ignore my posts. Obviously all different on this side of the pond

Over here a debit card is a debit card and a credit card is a credit card. None of this using your debit card as a credit card malarky.

Also we don't get charged for paying by debit card or for taking money out of other banks ATMs.

A very few websites here do charge for processing transactions and this will generally by 2 to 3 times more for a credit card than a debit card.

Yeh, we don't get charged at other banks ATM's either... some ATM's DO charge... but I've noticed they're fewer and fewer... the vast majority don't charge.

There is a charge of 20cents every time I use my debit card to purchase something though... but it's only 20cents

chime

Heineken Helen wrote:

Mine isn't :( well it is but if I check my balance it still shows the amount as being there... even though if I try to take it out it will say 'insufficient funds'. It takes a few days to show on the balance so it can be confusing.

i'm sure dunk will tell me I'm wrong though :rolleyes:

Mine shows both amounts ... balance and available balance ... but yeah it takes a couple of days to clear.

But yeah funds need to be in the account for the transaction to be authorised and then the money is on hold to be cleared for the vendor.

EDIT: and edit re your post above. Really we don't get charged for using debit cards. Was going to pay for something on a website the other day though and they were gonna charge a processing charge. £1.50 debit £4 credit ... I found the same thing elsewhere

South of Seattle

Spot In The Sky wrote:

So its not taken out immediately if I use debit? Well what if i have $0 and I do a credit, i wouldnt be able to make the purchase, so its not like they are lending me the money, right?

Some banks will allow you to go below your limit. Basically like an overdraft charge.

stylo17

South of Seattle wrote:

Some banks will allow you to go below your limit. Basically like an overdraft charge.

oh no don't start confusing Spot even more.

Pandemic

This thread is a joke, right?