• Skip to primary navigation
  • Skip to main content
  • Skip to primary sidebar
  • Money Management
    • Debt Reduction
    • Credit
    • Mortgages
    • Mutual Funds
    • Tax Strategies
    • Loans
  • Budgets
    • Saving Money
    • Income
  • Banking
    • Checking Accounts
    • Check Writing
    • Fraud
    • History
  • Entrepreneurs
    • Entrepreneur Interviews
    • Money Making Ideas
    • 3D Printing
  • Resources
  • Retirement
  • About
    • Privacy Policy

Personal Finance Blog

Tips And Stories To Help You With Managing Money

  • Privacy Policy
  • Saving Money In 2018
You are here: Home / Banking / Credit Cards / Credit Card Or Debit Card? It All Depends

Credit Card Or Debit Card? It All Depends

April 7, 2016 By Twila VanLeer

Which card is better to use between credit and debit?
Which card is better to use between credit and debit?

It’s one of the questions that enters into discussion whenever issues of personal finance come up. And the answer is not as easy as it would appear on the surface. Purchases with both cards are subject to processing that makes a difference. Before you decide how to handle your card-shopping, consider these factors.

Debit Card

When you use a debit card, the transaction usually requires a personal identification number or PIN. The transaction is completed in real time, with the money coming immediately out of your bank account and transferring to the merchant.

Credit Card

A credit card does not require a PIN and is an offline transaction. The funds remain in your account until the merchant settles the purchase. It generally takes two to three days for the transaction to be apparent in your account.

Fees

Before the Dodd-Frank Wall Street Reform and Consumer Protection Act was passed by Congress, card issuers could charge different fees for credit card purchases than for debit card transactions. Initially, interchange fees of 12 cents per transaction were set. They rose to a 21-cent cap before the bill was signed into law, but that was still significantly lower than the previous 45-cent fee that had been in effect.

Credit Unions

The law, however, does not apply to thousands of community banks and credit unions that issue cards. It is in effect for financial institutions with $10 billion or more in assets.

The caps tended to dry up the debit card rewards and free banking provisions that had been offered with cards.

Difference

With the regulatory changes it makes less difference if you use a debit card or charge card for your purchases. The major difference now is that a debit card does not help you build credit, while a credit card does. Many debit cards now will run transactions without the use of a PIN, which minimizes the prospects for fraud.

Personal Decision

If you pay off credit card purchases in a timely manner, avoiding the interest charges, the distinction between debit and credit is further neutralized. Most Americans are likely to have one or more of both types of cards in their wallets. How they use them as they shop is a personal decision.

Related Posts

  • Debit Cards

    [ad#250x250]Debit cards are gaining popularity these days, primarily due to the recession. People are trying…

  • Debit Cards

    Debit cards are used by millions of people in this era. A debit card is…

  • Credit Cards Help Build Your Credit

    More people are opting not to have a credit card. Studies show that 63 percent…

Filed Under: Credit Cards, Debit Cards Tagged With: credit cards, debit cards

About Twila VanLeer

Journalist/writer for more than 50 years. Pulitzer Prize nominee, 1983 for coverage of the first permanent artificial heart. More than 50 national, regional, local awards for news writing. Main writer for a memorial book for Deseret News' 150 th anniversary and for a book recounting the 1997 re-enactment of the pioneer trek from Omaha to Salt Lake City. Co-writer and editor of "True Valor," a book on the history of the artificial heart. Author of the book, Life Is Just A Bowl Of Kumquats, a wonderful story of a house wife and her trials with raising a large family.

Primary Sidebar

Personal Finance Articles

  • Make Saving A Priority
  • Review Your Home-Insurance Risks
  • Lowest Air Fare? Try August 28
  • Hackers Targeting Bitcoins
  • Keep Your Emergency Fund Intact

Save At Walmart

Search

Personal Finance Education

Investing Education from Morningstar.

As Seen On Intuit

Intuit.com has ranked Coolchecks.net #4 out of 10 of the best blogs to help you save money. We hope to help you become more aware of your own financial situation and strive to improve it.

Featured On Mint.com – July 2014

Mint Interview

Best of Personal Finance Blogs

Best of BuyerZone Business Finance Blog Recipient

Personal Finance Sites We Recommend

Get personal finance advice from the people behind the top money blogs, including Wise Bread, The Simple Dollar, Mint and Nerd Wallet.

Copyright © 2023 ·Metro Pro · Genesis Framework by StudioPress · WordPress · Log in