Using a Debit Card, what is the difference between debit and credit when asked by a retailer?

Question

~ Is there a similarity?

~ If not, why would a person pick one over the other?

~ Is credit for when a person doesn't have the funds in his or her account, so therefore, upon using, the person will have the time to deposit the funds? Enlighten me! Thanks!

Answer 1

When clerks ask you "debit or credit", 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.

Answer 2

Your bank/debit card has 2 sides. A credit side and a debit side. Debit is taken out immediately and affects your cash limit on the card (usually 500). The credit side generally has a higher limit and is also taken out immediately, but will stay in a pending status for usually 2 to 3 days.

Answer 3

check with your bank. Some banks charge a small fee

(.50 -$1.00 ) when you say debit as opposed to credit, but it all comes from your checking acct. Again, check your bank fees.

Answer 4

It's called debit if the money for the transaction is coming out of your own checking account, in other words, it will deduct from money that you already own.

Credit is when they charge you (your debit card would have a logo on the lower right corner, mine is Visa) and you will have to pay it off later just like any other regular credit card.

Answer 5

It all comes out of the checking account, regarless.  It just depends on how.

Debit posts the same business day to your account and will require use of a PIN number.  Most retailers prefer this method because it costs less for them to process it this way. Some stores will try to force you to use this way so it cost them less money.  Some banks charge extra for it, since they make less from the retailer then when it is done as credit.  For some banks, you will be able to see debit transactions online before credit transactions.

Credit goes through the normal credit card process although it comes out of your checking account.  The transaction may post the same business day or a few business days after the transaction.  Banks make more money from the stores for processing this way as opposed to debit.  So banks prefer this way.  Some banks will give perks for using credit over debit.  Also when you use credit, for those who don't keep good track of their checkbooks, there is a better chance of causing an overdraft which is a big moneymaker for the banks.