debit vs credit

debit vs credit

Each day we step into this money maze fully equipped with a piece of plastic; ready to face the choice of the words “debit or credit”. Whether you use a credit card or debit card or another form of plastic; often the choice of debit or credit drops in your pathway.

Are you aware the guidelines for managing risk on a “debit” transactions are often different then when you make it a “credit” transaction? The protection of your plastic falls under different rules when you use “debit” versus “credit”.  Debit transactions are often government by Banking Regulations that have different rules than “Credit” transactions. There is the Bank Secrecy Act and there is the Consumer Credit Protection Act with each having different rules. This becomes important when discovering fraudulent charges to your account. There are banks that will require you to take on the burden of the first $50.00 (fifty-dollars) loss for unauthorized charges to a “debit” transaction. If you use your cards for “Credit” than the major credit such as MasterCard, Visa, Discover, etc. often have zero liability; meaning you will NOT be out of the first $50.00 (fifty-dollars) loss.

When it comes to the chipped cards, retailers or banks who do not used these cards assume the liability versus MasterCard, Visa, Discover, etc. due to new laws that not too long ago went into effect.

If you ever select credit over debit and experience an unauthorized charge; don’t hesitate to mention your awareness of “Zero Liability” when contacting your cardholder or financial institution. Avoid the $50.00 (fifty dollars) expense for the initial loss; choose “Credit” when possible.

There are some retailers that have programmed their machines to lock you into debit if you don’t read as you navigate the transactions. Be aware, you can cancel the process and start over if necessary to choose “Credit” over “Debit”.  Be mindful, if you desire to get cash back; this requires use of “Debit” and your PIN, in most cases. Next time you get a chance research the words “Zero Liability” as it relates to “Credit” versus “Debit” transactions.

FYI – Credit transactions cost the retailer more than Debit transactions therefore only the retailer stands to gain a buck by you choosing Debit over Credit. Sure the retailers expense may just be embedded in the cost of your purchase but remember reduced liabilities equal minimum stress. A dollars saved is a buck earned. Do your research; laws, policies and rules do change over the years, in the end the decision is up to you.

It’s time to Tackle The Beast – Get Cents Get Paid!

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