Debit or credit?

I know what a debit card is. I know what a credit card is. I do not have a credit card but I have a debit card but they still ask credit or debit? Is there really a difference? Tell me if this is right...debit is done right then and credit takes longer to post?

Since you know what a debit card is you will know that when purchases are made with a debit card, the funds are withdrawn directly from the purchaser's (i.e. your)current/checking or savings account at a bank or credit union. The debit will be applied to your bank account at the transaction date (when you paid for something) or the nearest working date thereafter.

A credit card is different from a debit card in that the credit card issuer lends the consumer money rather than removing money directly and immediately from the consumers account. It is also different from a charge card (though this name is sometimes used by the public to describe credit cards) in that charge cards require that the balance be paid in full each month. In contrast, a credit card allows the consumer to 'revolve' their balance, at the cost of having interest charged. In contrast if a debit card was used and insufficient funds were available in the consumers bank account the transaction would either be refused or result in bank overdraft fees being incurred.

In the United Kingdom, banks started to issue debit cards in the late 1980s in a bid to reduce the number of cheques being used at the point of sale, which are costly for banks to process. As in most countries, fees paid by merchants in the United Kingdom to accept credit cards are a percentage of the transaction amount, which funds card holders' interest-free credit periods as well as incentive schemes such as points, airmiles or cashback.

In contrast debit cards do not usually have these characteristics, and so the fee for merchants to accept debit cards is a low fixed amount, regardless of transaction amount. This means it is cheaper for a merchant to accept a debit card for a large amount and to accept a credit card for a small amount.

Although merchants won the right through The Credit Cards (Price Discrimination) Order 1990 to charge customers different prices according to the payment method, few merchants in the UK charge less for payment by debit card than by credit card BUT notable exceptions are budget airlines, travel agents and IKEA!

Debit cards in the UK lack the advantages offered to holders of UK-issued credit cards, such as free incentives (points, airmiles, cashback etc), interest-free credit and protection against defaulting merchants (under Section 75 of the Consumer Credit Act 1974).

Despite the disadvantages of debit cards over credit cards, many people in the UK prefer paying with debit cards rather than credit cards, often because they fear that using credit cards will result in accumulation of unmanageable debts.

All establishments in the United Kingdom that accept credit cards also accept debit cards (although not always Solo and Visa Electron), but a minority of merchants, for cost reasons, accept debit cards and not credit cards (for example the Post Office).

I don't know if the incentives and card protection offered by debit and credit cards in the USA are different but would imagine so as most debit cards follow diverse banking system networks such as Switch, and most credit cards follow global credit organisations such as Visa or Mastercard.

Hope this answer clarified the matter.

debit comes out of your bank account & credit you will pay for at the end of the month when you send them a check...

Credit does usually take longer to post. Also, in some stores if you have a debit card they take you PIN instead of your signature as proof of identity, so they need to know then what type of card you have. You can tell them to put your debit card under "credit," but not the other way around.

no ,debit you just put a pin number and do not have to sign the receipt whereas credit you need to sign it .that is what they mean

If your some place and they tell you that your debit card Will be ran as a credit card, that usually means that the money will not be taken out of your account until about 24 hours later. So yeah it just takes longer.

The banks have pretty much evened the time period the money comes out of your account with either credit or debit transaction.

The whole difference now if that vendors usually have to pay a percentage fee if you choose credit. If you choose debit, your bank usually charges you a little fee (POS fee). Also, some people like the added security that you have to know your PIN to use the debit feature. You only have to sign your name for a credit transaction.

I always use credit so I don't get charged 50 cents by my bank.

Depending on your banks "system" they should both post at equal time. I work at a bank and our debit cards are online. So if you got to the store and hit credit it will post to your account right then, same if you hit debit.The only diffrence between hitting credit instead of debit is that you will have to sign for the transaction. If your bank is not online they still will post your account at equal time just in 24 to 48 hours of the transaction. It just depends on your bank. Most debit cards have MasterCard or Visa logo on it thats why they ask credit or debit. The best way to find out is ask your bank.

You are correct. I was wondering about the samething once I received my debit card.

Yes, debits take longer because the process follows a banking processing. Credit is faster because it was designed that way.

Correct ! May be they need to show in to their systems if payment is made by credit or debit to calculate overall cost of credit card commission. Just my guess !

most stores have to pay a small fee to run credit. my bank charges a small fee to use debit (pin #)

I think you are asking why, if the cashier sees that it's a debit card, do they still ask "credit or debit"? If your debit card says Visa or Mastercard on it, it can be run as "credit". You will simply sign the receipt rather than typing your pin. The money is taken out of your account exactly the same as if you entered your pin and "ran it as debit". Atleast that's how my debit card & bank work.

If debit, then your bank's acct is charged and the stores's credited. Thus, the bank carries no risk and thus charges less commision.
Credit implies that, although the store gets paid, the bank might risk that you don't pay (at least imely). Thus, they charge a higher commision.
I don't know why the store asks. It shuould be same, no?

If you have a Debit card with a Visa/Mastercard logo then there is very little difference to you if you choose credit or debit, the money comes from the same place.

The difference however is great for the merchant. If you choose Credit the card will be run as a Signature Based Credit Transaction. The merchant will pay an average of 2% for the transaction.

If you choose debit it will be run as a Pin Based Debit Transaction and the fees will be between $.30 - .80 (not percentage based) This is because there is less risk for the merchant for fraud or dispute if you use your pin.

If the transaction sizes average larger than $10.00 the merchant who takes debit saves a lot of money.

I bought $800.00 worth of snowboard & equipment for my daughter and used my debit card to help out the store owner since he said it would only cost him $ 0.45 for the transaction. If I had used my credit card(or debit card run as credit) he would have paid $16.00 (approx) for that transaction.

Hope that helps.

A Debit is an accounting entry which results in either an increase in assets or a decrease in liabilities on a company's balance sheet or in your bank account. In other words when you use your debit card you are decreasing your own assets.
A credit is:
1. A contractual agreement in which a borrower receives something of value now, with the agreement to repay the lender at some date in the future. Also, the borrowing capacity of an individual or company.

2. An accounting entry system that either decreases assets or increases liabilities.

So when you use your credit card you are borrowing money to get something today, with the intention to pay back the borrower at a later date.

You are right. Also, debit requires a pin number and credit requires a signature. Some places have a fee for using debit as well.

exactly! I usually pick debit because i use my card a lot and tend to forget what I charge on it. If I use my pin (debit) it posts right away and I can see the purchase under pending transactions.

Some clarification: The word 'debit' is used two ways, hence the confusion. First it describes the "hybrid" card itself as opposed to a strictly credit or strictly ATM card. But in the context of "credit or debit?" at point of sale (POS) it really means "ATM". If you use credit, the store pays for the transaction via MC/visa fee, usually around $1.50. This is why cashiers are encouraged to ask b/c if you aren't prepared, you may say debit; in which case, you'll enter your pin and pay for the transaction yourself. Usually as a POS ATM transaction fee charged by your banking institution. This can appear as a separate charge, or tacked on to your purchase total.

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