October 14 2010

Credit or Debit Confusion??

So the other day I lost my ATM card. I don’t know how and I don’t want to talk about it but it ain’t in my wallet and it can be anywhere and I canceled it and that’s that. It’s probably at the laundry getting washed. But I was definitely extra paranoid when it was gone because to be honest– I still don’t completely understand how my ATM card really works.

At some point along the way ATM cards became credit cards too. And I remember when that happened I was sort of like, ‘Wait… is this like both? Like if I use it as a MasterCard am I gonna get a separate bill?’ It was a little hazy but I whatevered it and over time figured out that it definitely draws straight from my checking account. Fine.

But that’s what makes me extra paranoid about losing it. If I lose it and some dick finds it and goes to Best Buy and gets himself a new flatscreen on my ‘credit card’– that charge will take actual real cash out of my account?? I never liked the idea of that. I think it’s scary. I’d just rather it be an ATM card only.

And then it got me thinking about the big ‘Credit or Debit?’ question. What’s the difference there if it’s coming from the same place? Aren’t they both essentially ‘debit’? I guess the idea of putting in my ATM # (which is 10804 btw) is some level of protection — but why should I care? I buy something for $50– why friggin bother to put in my ATM code– if a thief would have the option not to?

On google-ing around it seems there’s no clearcut answer. There’s alot of factors at play including what it costs the store or you or liability issues or bank fees and all sorts of blah blah stuff etc— I couldn’t absorb via skimming a bunch of wordy web pages that seemed more properly confused.

But the takeaway it seems is there is no ‘right’ answer or it depends on your bank and their policies or whatever and it all seems scammy and yadda yadda typical banky gray area-ness. All I know is that I liked it better when I didn’t think there was a difference…

Even though I’m still not sure if there is one.

ok bye!
tOdd

PS. I’m up early and I didn’t sleep well because there’s a ruthless mosquito in my house!! I will get you, mosquito a-hole! You will be squashed!! I will have no mercy, mofo-er!

23

JV says:

Good morning early bird! Hopefully the card shows up.

Anonymous says:

RedTape: when clerks ask this question, they are really asking you to pick one of two ways they can process your debit – a PIN (personal identification number) based transaction or as a signature-based transaction. One costs the merchant a little more and one takes a little longer to hit your checking account, but fundamentally a debit transaction is a debit transaction.

Banks are evil. Get a credit union.

WTF?!?!?!? says:

Ditto that. Credit Unions are the way to go. Check ‘em out and you’ll agree.

Once you go credit union, you won’t go back.

Anonymous says:

I agree with WTF credit unions are the way to go. I have a seperate debit card and credit card, so they can not be confused or abused. The debit card I use like a drunken sailor, but I am always aware the amount in my account. The cc I rarely use because I am scared of credit card fraud/theft.

Anonymous says:

Merchants pay different fees based on what option you chose. If you notice the credit processing machine usually starts off with DEBIT first. You have to hit a button to access the credit(Sign your name) part. Now on to how it works. Some banks only protect you if you chose CREDIT over debit. Also most banks cover any loses from a stolen ATM/DEBIT card, but you are without those funds until all the fraud charges are repaired on your account. In the past banks would post charges on a DEBIT/ATM card to your account even if you did not have the money and “WAMMO” hit you with an overdraft fee. So the $3.50 coffee you just purchased thinking you had money in the bank now costs you over $30.00 in fees. That law has now changed and the charge must be rejected.
If possible try to use a credit card to purchase things, as you have more protection and pay off the balance each month,

Anonymous says:

LOL it is funny when I actually have cash and they ask credit or debit. When I say cash there is like a 10 second delay for them to process that.

Anonymous says:

I guess one of the down falls of debit cards is that some crafty thieves can put skimmers on some of the atms and things like gas pumps. They have a camara on the skimmer that records you keying in your PIN#.

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Yellowdog says:

Here’s a very general rule of thumb:

If you pay off your credit card balance in full each month, then use the credit card mostly. You get lots more fraud protection, and if you have a card that gives you stuff back (airline miles, cash, etc), you gain this stuff faster.

If you have ANY credit card debt that you’re chipping away at, DO NOT use the credit card. Hide it away, use debit, and pay that credit card off asap. Any airline miles or cash back from the credit card are totally not worth paying all that interest.

Paullers says:

When I was poor (okay… poorer than I am right now) I started doing DEBIT whenever possbile, because it showed up on my account much faster.

When I was cutting it down to the pennies, nickles, dimes and quarters I picked up on the street while riding my bicycle and what I managed to keep in my account, I didn’t want to get caught by… “Um, well I think I had $6 in there yesterday.” The bank and it’s overdraft stuff would kill me!

Anonymous says:

All I ever use are quarters. Got me a big sack of quarters in those paper rolls that I carry around with me when I go out. I bought a plane ticket with quarters once. They put up a big fuss, but it’s money! Hell wit’ ‘em. They’re lucky they don’t have to count ‘em all.

Alex says:

It depends on the bank, but for the most part, if someone steals your debit card, and uses it (as debit or credit), the money is gone from your account. It’s not like a credit card where the company will reverse the charges. Your only option is to report it to the police, and hope they find the person that stole it. It’s just like someone stole the cash right from your wallet.
You’re way better off paying for stuff with the credit card, which offers you a ton of protection. The trick is to pay it off each month…

Lorelei says:

Awww, suckness. Been there.

When you ARE reissued another card, find out if (based on the credit logo) you can demand the vendor have the purchaser provide ID (a nice safeguard, and free) so some schmuck can’t just go willynilly with his/her newly acquired means o purchasing, and go purchase 80 copies of “AssMaster Two”.

Z says:

Actually, I have been told by credit management services that you should always use “credit” because it is best for you and worst for the banks. If you use “debit” the money comes out of your account right away but if you use “credit” although it comes out of the same account, it comes out a few days later which can help you if you are managing cash resources very closely like me.

~Z

My Butt Here says:

You can still option just the ATM with your bank. It’s a sly way that banks use to get you a credit line for overdraft withdrawl and then scheme up ways to get you to have fees. Lets say you can’t keep track of your balance. You just swippy away on a bunch of 5 to 10 dollar items, Then you go over on a big purchase and over draw by 5 bucks. Then WHAM they hit you with an overdraft fee for all the little purchases and not the big one. That’s what they hope for with the combo card.

Bob in Peru says:

How refreshing ! Intelligent commentary instead of the pre-pubescent rants of the socially maladjusted Weezes et al.

Shifty says:

When in doubt… use the five-finger discount.

No stinkin’ ATM fees, interest, or risk of being scammed by a skimmy-scammer scumbag.

Shifty says:

Sorry, Bob from Peru, I couldn’t resist. I just felt that there were some options that were not being explored, and that they should get some equal time.

Until you’re caught, anyway… then you’ll be DOING time. So there are drawbacks to this system too.

NoPINS says:

A lot of banks (if not all) will charge you for PIN-based transactions. Yeah, they may give you 4 or 5 free each month.. but after that, there’s probably a fee. Check with your bank. They tend to breeze over that fact when you set up the account.

I never use pin-based transactions… unless I’m at an ATM getting cash.

Chank says:

The difference between credit and debit comes down to who gets to collect the fees.

As a principle, I use debit because there’s less fees for the merchant; less people getting paid who didn’t really do anything to help me get what I bought. Especially with mom and pop shops, I try to avoid using credit.

If I understand correctly, the bank issues your credit card, and gets to collect the interest charges and fees. MasterCard and Visa are separate companies, and they get the merchant fees, and they also pay for the card member rewards, such as miles etc… to encourage people to use their cards. They make money even if you always pay it off.

Basically, credit cards are a huge scam perpetrated by people who have so much money that they can write the rules of how you use it to make themselves even more money.

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you should use a weight loss calculator

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