Credit vs Debit

While sometimes I find that MSN is a black hole of information, it occasionally has its moments. Take for instance the whole debit vs credit argument. At times when you are shopping for your favorite pair of heels (have to work fashion somehow in this post), you will find the salesperson asking whether you want to use your card as a debit or a credit. There are definitely advantages on one versus the other.

With credit you get the protection of the issuing company. So if something goes wrong (as they often do) you are protected. The drawback is that if something goes wrong with the purchase, let’s say the size is too big (I wish) when you return it, you will usually have to wait a couple of days to have the money returned to you.

The flip side is buying with debit.

Buying with debit doesn’t give you the same level of protection you would get say with a credit card. Getting your money back is a little harder, especially for fraud on big ticket items. But it is a lot easier if you’re just going to a store and returning an item. In that scenario you get your money back immediately. Hence one of the advantages.

A major disadvantage (depending on your point of view) is that you always incur a bank charge when you purchase with debit. Bank charges range from $1.50 to $2.00 per transaction. It’s the same thing as using an ATM from a bank other than your home bank. To make matters worse, not only do you get a bank charge from the store’s bank, your bank may add a service charge for the transaction. So instead of just a $2.00 fee for purchasing those super popular ballet flats at that $10 deal price, you get a $5.00 fee on top of the original price and tax. Doesn’t sound like a deal does it?

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3 Comments to Credit vs Debit

danae
March 7, 2006

I’m staggered that you incur a bank charge when purcashing by debit — when did that start happening? i only left the U.S. about three years ago, but I would have been furious if they’d tried that!

cia
March 7, 2006

It’s always been the case I’ve found. A couple of years ago I asked my bank why there was a service charge for a purchase and the explanation was that I purchased something debit and used another bank for the transaction. It made me mad to no end.

michelle
March 8, 2006

My bank card is a debit and credit card. I only use the debit feature when I need cash back because it’s the same charge as using a non Citibank ATm. I normally use the credit feature because I get airline miles with it

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