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(From the Financial Literacy Blog) – If you’ve ever made an in-store purchase with a card, you’ve probably been asked the question, “Are you using debit or credit?” With your debit card in hand, you may think your only option is to simply enter your PIN. The credit option is reserved for credit cards, right? No – you can run your debit card as credit and there are benefits to doing so.
The main and most important benefit of running your debit card as credit is the added protection and security. If you swipe or insert your debit card and then enter your PIN, you may find yourself liable for charges as a result of any fraudulent activity. If your Personal Identification Number or card information is stolen, you need to report the fraud to your financial institution as soon as you can. The sooner you do, the less you are liable for. If you report the fraud within 60 days, you’re only liable for up to $500. If you report the fraud within 2 days, you may only be on the hook for up to $50.
Unlike debit, most reputable card processors won’t hold you liable for unauthorized credit transactions. If you run your debit card as credit, you’ll be protected by zero-liability policies, where all your money would be refunded back if an unauthorized charge was made.
But, wait – what is the interest rate when you run your debit card as credit? That’s not how it works. Although you get the added protection, selecting ‘credit’ at checkout doesn’t transform your debit card into a credit card. The money will still be pulled from your checking out, albeit not immediately. The funds will usually be withdrawn from your account within a few days. You also are not building your credit score using your card in this way because you aren’t borrowing any money. In addition, running a debit card as credit is a great alternative for people who don’t feel comfortable with a credit card or don’t trust themselves to pay it off..
There are other benefits to running your debit card as credit. Most retailers don’t require you to sign at the terminal when you make a purchase under $25, which can expedite the checkout process. You also may be able to earn rewards when you select credit over debit. Check with your local credit union to see if they offer any rewards programs when choosing credit. If they do, you can potentially earn cash back or redeem points for merchandise, gift cards, and other exciting offerings.
Will that be debit or credit?