Credit vs debit? Both offer protection and security when using them but which should you use and when?
First of all, credit cards have a big advantage: they are not linked directly to your bank accounts. Along with this they tend to have more security against fraudulent charges, although most debit cards now have similar protection. Fraudulent charges on a credit card are usually reversed in 24 hours or so but getting the funds returned to your debit card account can take weeks.
When selecting credit or debit when swiping a card at the terminal, it is most likely a debit card or a card issued by your bank, and which option you select does make a difference. Selecting credit: This requires a signature and the amount may or may not be deducted right away, depending on whether the merchant batch processes the transaction or not. Some cards offer some anti-fraud protections more similar to credit cards but be sure to check your specific card agreement. Selecting debit: This requires that you enter a pin and the funds are deducted right away.
But the real question is, when to use one over the other?
When to choose credit:
If you are traveling. The anti-fraud protection offered with credit cards is a big deal if someone steals your card. Many credit cards also offer travel benefits such as discounts on rental cars or frequent flyer miles.
If your making a large purchase. The extra warranty protection from the card provider often goes beyond whats offered by the manufacturer.
If you are shopping online. Again the zero liability policies are king. Unlike debit cards you wont be held liable for fraudulent charges. Also, credit card providers monitor for suspected fraud which adds some extra protection.
When to choose debit:
If you’ve had trouble in the past managing credit cards. Some people have issues managing credit cards and spending more than they can repay. By using a debit card you can only spend what you have.
If you want to avoid racking up interest or possibly late payment fees. If you know you are likely to not pay bills on time or to over spend a debit card might be best. Credit cards can carry annual fees, over the limit fees and late fees depending on the card and how you manage your finances.
Click to read about Avoiding credit card fraud
Which ever you choose, credit vs debit- Frontline Processing is there for all your merchant service needs!