Debit or Credit?

Credit vs Debit

Imagine you’re at the checkout counter at your grocery store, or maybe a gas station. Once the teller has rung up all the items and you’re handing over the card (or swiping it yourself), you’re most likely facing a question: Debit or credit? It might also be phrased as “Do you want to enter a PIN number?” or in various similar ways. Sometimes it’s the teller asking, and sometimes it’s a machine. And you might be wondering: what’s the difference?

If you’re using a credit card, most likely the teller asked out of rote repetition, because it’s going to be credit either way.

But if you’re using a debit card, there’s an important distinction being made here. On your end of the transaction, the most important difference has to do with protecting yourself from identity theft. One of these two options offers better protection than the other, and it might not be the one you think. If possible, always run your debit cards as credit.

Why not debit? The need to input a PIN number sure makes it seem safer, after all. Here’s the thing about running a card as debit: if someone gets your card information and spends every cent in the account, you’re most likely out of luck. In most cases your bank is not required to reimburse you, though any debts incurred by the identity thief will likely be cleared. Also, inputting your PIN number offers identity thieves a chance to observe what it is. That puts them a big step closer to heading to the nearest ATM to clear you out.

Credit cards are automatically covered against identity theft, and any charges an identity thief makes will be canceled. If you run debit cards as credit, which is perfectly fine and legal, you will then enjoy the same protection. If someone were to steal the card or the account information at that point, you stand a much better chance of recovering your money. Let the financial institution eat the loss- they’re insured for it, and you put your money there for convenience and protection in any case. They’re also probably in a better position to recover from it.

Thanks for reading,



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About Taylor Kothe

I'm a husband, accountant, and sometime blogger from Tulsa, Oklahoma. My passion is for personal finance, especially as it relates to teaching everyday people how to handle their everyday incomes and expenses. If you've ever found yourself lost in a rising tide of strange financial terms and incomprehensible policies, you're far from alone. So let's put our heads together and see if we can de-mystify some of the financial challenges that we all face.

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