How widespread are debit cards in the US?

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Debit cards are widely accepted in the U.S., with credit cards also being common, particularly at gas stations where debit is often the default option. Most establishments accept both types of cards, making cash transactions increasingly rare, especially for larger purchases. Users typically prefer debit cards for everyday expenses, while credit cards are favored for larger amounts due to rewards and points. The distinction between debit and credit cards can be confusing, as many cards can function in both capacities depending on how they are used. Overall, the trend indicates a shift towards card payments over cash in various regions across the U.S.
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Where I live, using a debit card when paying is the norm pretty much all around, and using cash is quite rare. I've heard that in the US using a card isn't that customary? And if you do you need to sign in addition to entering the PIN? Are establishments where cash is all they'll accept common?
 
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I have noticed for several years now that at gas stations when you put in a card and it asks what kind it is the default is that it is a debit card, not a credit card.

Hard to imagine any but the smallest stores in the USA where credit cards are not accepted and if credit cards are OK, surely debit cards are so no I can't imagine many places where it's cash only.
 
You don't use http://www.shell.us/motorist/shell-payment-cards.html, do you ?
I thought people'd use it like some sort of a pre-paid card instead. I can't imagine how people insert their "credit cards" (with VISA/Master marks) and get charged for their purchased gasoline volume.
 
Pepper Mint said:
You don't use http://www.shell.us/motorist/shell-payment-cards.html, do you ?
I thought people'd use it like some sort of a pre-paid card instead. I can't imagine how people insert their "credit cards" (with VISA/Master marks) and get charged for their purchased gasoline volume.
No I don't use company credit cards, just regular ones. I don't understand why you see any problem using regular credit cards at the gas station. They use the same mechanism as debit cards but you don't have to enter a pin or anything, just sometimes your zip code.
 
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Pepper Mint said:
I can't imagine how people insert their "credit cards" (with VISA/Master marks) and get charged for their purchased gasoline volume.

Exactly the way you said - you insert the credit card into the machine, and you get charged for the purchased gas. I do it all the time. Trivially simple. Yes, I use a VISA credit card, but the same machine will also accept non-credit VISA cards.
 
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TSN79 said:
Where I live, using a debit card when paying is the norm pretty much all around, and using cash is quite rare. I've heard that in the US using a card isn't that customary? And if you do you need to sign in addition to entering the PIN? Are establishments where cash is all they'll accept common?
I don't know if there is a language barrier here, but in the US a "debit card" and a "credit card" are the same physical card. They only differ slightly in their financial linkages and indeed the same card can often be used in either mode. We can discuss the intricacies of each or...

If you are just asking whether people use cash or cards, it is personal preference, but I tend to use cash only for small purchases and cards for everything else.
 
Both debit and credit cards are common in the US, but different people have different preferences in using them.

I use cash for small purchases, up to about $10-15, and a credit card for larger ones. I always pay the monthly credit-card statements completely so as not to run up any interest charges.

I use a debit card only at a bank's cash-dispensing machine.

So far, I've used pre-paid / refillable cards only for fares on some city train and bus systems (e.g. Washington DC's Metrorail).
 
When you say debit card, I think of a Visa Debit Card which you use like a credit card, except you are spending your cash that is available in that account. You do not get a bill each month telling you to pay the bank the money because what you are spending is your own.

I guess you're talking about the equivalent in NZ, an EFTPOS card. That's a card you swipe, choose either 'Cheque' or 'Savings' account and enter your 4 digit pin. Not every shop in NZ takes credit cards.
 
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StevieTNZ said:
When you say debit card, I think of a Visa Debit Card which you use like a credit card, except you are spending your cash that is available in that account. You do not get a bill each month telling you to pay the bank the money because what you are spending is your own.
The way you worded that is a bit confusing, but I think I know what you mean. My understanding is that "Visa" a payment processing company/method and "Debit" is a different payment processing method. So "Visa Debit Card" is self-contradictory word salad. It's a "Visa, Debit Card" (regardless of how it is printed on the card). I don't mean that to nitpick; it's confusing. Point being, I have two "Visa, Debit" cards, from the same bank, both of which can be used as credit cards or debit cards even though one is linked to a bank account and the other to a revolving line of credit.
 
  • #10
To make things even more confusing you can have a "Visa electron" card (whatever it really means - I got such card in the past, it was just a debit card as far as I remember), and VISA virtual cards - my bank offers them for internet operations (they don't exist as a piece of plastic, but you can give the number which is connected to a subaccount in a bank - this way you can't be ever charged more than there is on the subaccount). Or perhaps these virtual ones no longer exist, I remember seeing them offered several years ago.

Plus, some VISA cards are flat, and some have embossed lettering, and these differ too in some way (my credit card has embossed letters, Marzena's credit card doesn't have them).

Not to mention at least four different technologies used to identify the card (embossed letters, magnetic stripe, chip and RFID).

And then, some solutions are used only in some countries.

And if you feel confused, you should listen to my son - at the moment he writes software for card payments. Typically I get lost mid-first phrase.
 
  • #11
Borek said:
To make things even more confusing you can have a "Visa electron" card
Visa Nebula - Coming soon... It's in the cloud... :-p

Ah it's a joke.
 
  • #12
TSN79 said:
Where I live, using a debit card when paying is the norm pretty much all around, and using cash is quite rare. I've heard that in the US using a card isn't that customary? And if you do you need to sign in addition to entering the PIN? Are establishments where cash is all they'll accept common?

This will depend on the area. In mine, the method used is mainly debit. A couple of places have caught on and will take a debit card, but not a credit card. The business is charged a much higher percentage of the total to run a debit card as credit, now, many banks are asking their account holders to run their debit cards as credit and give loyalty points for doing so, as they profit considerably. Years ago, I ran internal audits on accounts received for a large corporation, occasionally issues would arise where I would catch customers being overcharged by associates after they found the customer was going to use a credit card. It was unacceptable (and illegal). It's so very amazing to me that people could think a company was okay with so many opportunistic behaviors. They didn't last very long under my watch, I just loved hunting down discrepancies in number patterns all day. Be wary for anyone asking your method of payment before closing a deal.

Many places that used to only take cash, like yard sales, flea market booths and such, now use adapters for their cell phones to run debit/credit cards. Still, most places here in the south will accept cash, but not a check. Also, Mastercard and American Express are less likely to be taken than Visa or Discover, as they charge the business higher percentages of the total purchase to process the transaction.
 
  • #13
russ_watters said:
The way you worded that is a bit confusing, but I think I know what you mean. My understanding is that "Visa" a payment processing company/method and "Debit" is a different payment processing method. So "Visa Debit Card" is self-contradictory word salad. It's a "Visa, Debit Card" (regardless of how it is printed on the card). I don't mean that to nitpick; it's confusing. Point being, I have two "Visa, Debit" cards, from the same bank, both of which can be used as credit cards or debit cards even though one is linked to a bank account and the other to a revolving line of credit.
Yeah, I'm not that good sometimes at writing what I want to say, which makes sense to me but may be unclear to others. The best I can do is refer you to this link https://www.asb.co.nz/bank-accounts/visa-debit.html in hope that clarifies.
 
  • #15
I use credit cards for just about everything. I pay them off every month and collect points/miles.
 
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  • #17
Greg Bernhardt said:
I use credit cards for just about everything. I pay them off every month and collect points/miles.
Yeah, if you use a Visa (or MasterCard) Debit card, you don't need to pay the card off each month, because you are using your own money rather than the banks.
 
  • #18
russ_watters said:
The way you worded that is a bit confusing, but I think I know what you mean. My understanding is that "Visa" a payment processing company/method and "Debit" is a different payment processing method. So "Visa Debit Card" is self-contradictory word salad. It's a "Visa, Debit Card" (regardless of how it is printed on the card). I don't mean that to nitpick; it's confusing. Point being, I have two "Visa, Debit" cards, from the same bank, both of which can be used as credit cards or debit cards even though one is linked to a bank account and the other to a revolving line of credit.
It's not quite that simple.

According to the Visa web site:

https://usa.visa.com/pay-with-visa/cards/card-finder/gift-finder-page.html

the company offers four types of cards, and they're not all necessarily interchangeable.

1. The traditional Visa credit card - this is a charge card with a credit account, usually offered through a bank or other financial organization. You charge your purchases and receive a monthly bill. Any unpaid balance starts to accrue interest charges at varying rates of interest.

2. The Visa debit card draws the amount of your purchase directly from your bank account. You don't need to carry cash or write a check to make a purchase.

3. Pre-paid cards are instruments which can be used if one does not have a bank account. The user loads funds into the card account and can keep re-loading money onto the card as long as desirable.

4. Gift cards are sold by retailers with a pre-determined amount of cash loaded. Once this amount is used up, you toss the gift card.
 
  • #19
StevieTNZ said:
Yeah, if you use a Visa (or MasterCard) Debit card, you don't need to pay the card off each month, because you are using your own money rather than the banks.
And you don't get points / miles. In other words, Greg's way costs exactly the same as your way (what you spend and no fees) PLUS he gets points / miles.
 
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  • #20
phinds said:
And you don't get points / miles. In other words, Greg's way costs exactly the same as your way (what you spend and no fees) PLUS he gets points / miles.
Yes, but if you max out your card and can't afford the monthly repayments then you're screwed. I want the security of knowing that what I pay for, using my Visa debit card, is money I actually have.

EDIT: but you can make the argument that you might not be given a credit card with x amount limit without the bank (or whatever) ensuring you can pay the monthly statements.But I refer to this point:
"1. The traditional Visa credit card - this is a charge card with a credit account, usually offered through a bank or other financial organization. You charge your purchases and receive a monthly bill. Any unpaid balance starts to accrue interest charges at varying rates of interest."
If the test for getting a credit card is the ability to pay the minimum repayment each month, you are charged interest on any remaining amount.

In any case, I'm not concerned with points that I could gain. I don't even know what points Visa even offers its customers if they use their credit card.
 
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  • #21
StevieTNZ said:
Yes, but if you max out your card and can't afford the monthly repayments then you're screwed. I want the security of knowing that what I pay for, using my Visa debit card, is money I actually have.

EDIT: but you can make the argument that you might not be given a credit card with x amount limit without the bank (or whatever) ensuring you can pay the monthly statements.But I refer to this point:
"1. The traditional Visa credit card - this is a charge card with a credit account, usually offered through a bank or other financial organization. You charge your purchases and receive a monthly bill. Any unpaid balance starts to accrue interest charges at varying rates of interest."
If the test for getting a credit card is the ability to pay the minimum repayment each month, you are charged interest on any remaining amount.

In any case, I'm not concerned with points that I could gain. I don't even know what points Visa even offers its customers if they use their credit card.
Companies like Visa offer individuals credit cards with a set credit limit which is usually determined by the card holder's creditworthiness. For people who have damaged credit, or who have not established a credit history, often the pre-paid card is the vehicle offered to them, until such time that their financial situation changes and they can qualify for a credit card.
 
  • #22
phinds said:
And you don't get points / miles. In other words, Greg's way costs exactly the same as your way (what you spend and no fees) PLUS he gets points / miles.
Well, the months interest must be paid by someone, either the banks bank on users missing payments and take the hit for on-time payers or it's built into the fee structure somewhere.My experience in New Zealand is that credit cards have over double the monthly fees of debit cards.
I thought about getting a credit card when I was offered one as a student as it was fee free, I planned on transferring the limit over to an on call savings account and then back again on the due date, rinse and repeat for free money, alas the 'cash advance fee' put an end to that.
 
  • #23
SteamKing said:
It's not quite that simple.

According to the Visa web site:

https://usa.visa.com/pay-with-visa/cards/card-finder/gift-finder-page.html

the company offers four types of cards, and they're not all necessarily interchangeable.

1. The traditional Visa credit card - this is a charge card with a credit account, usually offered through a bank or other financial organization. You charge your purchases and receive a monthly bill. Any unpaid balance starts to accrue interest charges at varying rates of interest.

2. The Visa debit card draws the amount of your purchase directly from your bank account. You don't need to carry cash or write a check to make a purchase.

3. Pre-paid cards are instruments which can be used if one does not have a bank account. The user loads funds into the card account and can keep re-loading money onto the card as long as desirable.

4. Gift cards are sold by retailers with a pre-determined amount of cash loaded. Once this amount is used up, you toss the gift card.
My understanding was that at the point of sale, all Visa credit card transactions (1, 3 and 4) are identical, whereas a true debit transaction doesn't go through Visa at all. I'm pretty sure that if I use my bank card in debit mode, the money is withdrawn from my account instantly, whereas if I use it in credit card mode, it takes a couple of days to be processed by the credit card company before being withdrawn from my account. Note also that a debit transaction does not need to be linked to a bank account. Most credit cards come with "cash advance" capability, which allows you to use it in debit card mode.

And what I mean by modes is:
Credit card mode is where you select "credit card", swipe, and either sign or provide your zip code.
Debit card mode is where you select "debit card", swipe, and provide your bank/atm pin # (or your credit card's atm pin #).

Note also that "credit card mode" is changing, with the use of chip cards in the US. I think retailers and card companies were required by law to have implemented them a few months ago, but most retailers still don't have active chip readers.
 
  • #24
billy_joule said:
Well, the months interest must be paid by someone, either the banks bank on users missing payments and take the hit for on-time payers or it's built into the fee structure somewhere.
Yes, banks make money on credit cards due to membership fees, interest and late fees (edit: and by charging the retailer a transaction fee). But if you select a points card with no membership fee and always pay on time, you can make money on it. I mostly use my Amazon (by Chase) card these days.
 
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  • #25
Everyone has to come to their own judgment of the risks of debit versus credit cards, and act accordingly.

I use credit cards instead of debit cards because I prefer to keep a buffer between the "outside world" and my checking account. In recent years, I've had my credit cards compromised three times, with bogus purchases by people who stole my card information. In each case, the card issuers quickly invalidated the charges, closed the account, opened a new one for me, and sent me a new card. No money ever left my checking account. If they had been debit cards instead, the money would have been gone from my checking account, if only temporarily.

On the other hand, many people do have trouble paying off their credit card balances at the end of each month and thereby avoiding interest charges. Many people (in the US at least) carry credit-card balances of thousands of dollars, at > 18% annual interest rates. It's sensible for people in that situation (or who fear falling into that situation) to avoid credit cards completely.

My wife and I don't actually use our credit cards much, usually no more than 5-6 times a month, except when we're traveling. We've never had trouble keeping enough money in our checking accounts to cover the amount we owe on them.
 
  • #26
russ_watters said:
My understanding was that at the point of sale, all Visa credit card transactions (1, 3 and 4) are identical, whereas a true debit transaction doesn't go through Visa at all. I'm pretty sure that if I use my bank card in debit mode, the money is withdrawn from my account instantly, whereas if I use it in credit card mode, it takes a couple of days to be processed by the credit card company before being withdrawn from my account. Note also that a debit transaction does not need to be linked to a bank account. Most credit cards come with "cash advance" capability, which allows you to use it in debit card mode.
Card users should check their monthly statements to make sure they understand the interest rates being charged on their accounts.

Even though your card may not carry any annual fee and may have a relatively low interest rate on purchases, features like cash advance or use at a bank ATM may carry some significant fees, and the money obtained thru cash advance may be charged an interest rate which is often much higher than that charged on the balance outstanding from new credit purchases. You should also familiarize yourself with the details of how your monthly payments are credited to your outstanding balance; often the amounts earning the highest interest for the credit card company are the ones which get paid last, unless the entire outstanding balance is paid off. This information is usually spelled out on your monthly statement.

When you use a credit card to charge an open-ended purchase, like for renting a car or staying at a hotel, the card company knows this pretty much instantly from the POS terminal and usually blocks a certain portion of your available credit limit so that it is available when that particular transaction is finally closed out.

The old days of signing a charge slip and waiting for the merchant to send information back to the card company are long gone, for the most part. Most small purchases are authorized without delay, but for larger purchases, when you swipe your card, that information is sent immediately to the card company by the POS terminal, and the card company can authorize or decline the purchase on the spot.
 
  • #27
russ_watters said:
My understanding was that at the point of sale, all Visa credit card transactions (1, 3 and 4) are identical, whereas a true debit transaction doesn't go through Visa at all. I'm pretty sure that if I use my bank card in debit mode, the money is withdrawn from my account instantly, whereas if I use it in credit card mode, it takes a couple of days to be processed by the credit card company before being withdrawn from my account. Note also that a debit❈ transaction does not need to be linked to a bank account.
I don't know whether credit cards in Australia are still dual-purpose like you describe. About 25 years ago my Credit Union issued such cards, but I believe a lot of people found the transaction distinction incomprehensible. This Credit Union now offers separate Visa cards, one for credit and another for debit. A Visa debit card operates directly on the linked savings account and offers no credit/overdraft facility, but it has Visa protections and can be used internationally.

❈ I think you mean "credit transaction" here. (Evidence: I have credit cards with a bank where I have no savings or other account.)

Most credit cards come with "cash advance" capability, which allows you to use it in debit card mode.
Credit cards do offer "cash advance", but on Australian credit cards a cash advance is a loan from the bank and begins attracting high interest immediately regardless of any interest-free period the card may offer on purchases. There is no way to withdraw a handful of cash from your savings account using a credit card.
 
  • #28
NascentOxygen said:
I don't know whether credit cards in Australia are still dual-purpose like you describe. About 25 years ago my Credit Union issued such cards, but I believe a lot of people found the transaction distinction incomprehensible. This Credit Union now offers separate Visa cards, one for credit and another for debit. A Visa debit card operates directly on the linked savings account and offers no credit/overdraft facility, but it has Visa protections and can be used internationally.
Yeah, I have both cards from my bank too, and the difference is on the bank side: one is linked to a checking account and the other to a revolving line of credit (credit card account). Still, either can be used for either debit or credit transactions.
❈ I think you mean "credit transaction" here. (Evidence: I have credit cards with a bank where I have no savings or other account.)
No, I meant it the way I said it. I know it works both ways and just wasn't sure others recognize it can work the way I said it.
Credit cards do offer "cash advance", but on Australian credit cards a cash advance is a loan from the bank and begins attracting high interest immediately regardless of any interest-free period the card may offer on purchases. There is no way to withdraw a handful of cash from your savings account using a credit card.
Right. My intent was simply to point out that on the front end (the card and its physical use), the cards and transaction inputs are interchangeable. What is different is on the back end: what kind of account the card is linked to.

Or another way: when you make the transaction, you swipe the card and then select "debit" or "credit". You can use either card with either selection.
 
  • #29
russ_watters said:
Or another way: when you make the transaction, you swipe the card and then select "debit" or "credit". You can use either card with either selection.
You seem to be emphasising a point, but precisely what it is continues to elude me. I know you can select "credit" and if it's a true debit card your selection will be ignored and it reverts to a debit transaction straight out of the linked savings account. (A debit card has no line of credit.)

No, I meant it the way I said it.
Then I remain mystified. There can't be a debit transaction unless there exists an account containing your money and which can be directly debited to fund the transaction.
 
  • #30
NascentOxygen said:
You seem to be emphasising a point, but precisely what it is continues to elude me. I know you can select "credit" and if it's a true debit card your selection will be ignored and it reverts to a debit transaction straight out of the linked savings account. (A debit card has no line of credit.)

Then I remain mystified. There can't be a debit transaction unless there exists an account containing your money and which can be directly debited to fund the transaction. [emphasis added]
I have never seen a card terminal ignore a transaction type selection and select the other one. When I select "credit", it asks for a signature or zip code and when I select "debit" it asks me for a pin number. The point of sale device has no idea what type of account the card is actually linked to. It has no reason to care if there is a cash bank account or credit account on the other end. And most banks treat the transaction types differently, with fees, rewards, etc.

Looking at my checking account, I can tell the difference between the two:
-Transactions that were rung-up as "credit" transactions say "Debit Card Purchase" and take 1-3 days to withdraw the money from my account. I assume the delay is because these transactions are actually routed through Visa company.
-Transactions that were rung-up as "debit" transactions say "POS Debit" and the money is withdrawn instantly. I assume these are instant because the transactions are direct to the bank.

10 or 20 years ago, you used "ATM Cards" (debit cards) at ATMs and some supermarkets and you used "credit cards" everywhere else. You couldn't use a "credit card" at an ATM or a "debit card" to buy dinner because the cards were not capable of being authorized for the other type of transaction. Now either card can be used at places that accept either type of transaction.

It may have largely become moot today because most places accept both and both cards do both (and that may be why you aren't seeing a difference), but the difference once had quite a bit of relevance. It is, however, still relevant which transaction type you pick because the fees are different for the different transaction types. And given the OP's apparent confusion or just sloppiness, I wanted to be complete in my explanation.
 
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  • #31
I am confused about the 'debit or credit" selection on my debit card, both transactions are debited equally from my checking account without any fees. Some merchants prefer that I select "credit", where I sign the receipt, others are fine with "debit" where I simply enter my pin. There is no difference to me. There are no fees for either. Perhaps this varies from bank to bank?
 
  • #32
Evo said:
I am confused about the 'debit or credit" selection on my debit card, both transactions are debited equally from my checking account without any fees. Some merchants prefer that I select "credit", where I sign the receipt, others are fine with "debit" where I simply enter my pin. There is no difference to me. There are no fees for either. Perhaps this varies from bank to bank?
Hm ... that's quite different than what I experience. My credit cards are not it any way tied to my bank account. I have to write a check to the credit card company every month. Debit cards are, as you experience, debited to a bank account immediately.
 
  • #33
phinds said:
Hm ... that's quite different than what I experience. My credit cards are not it any way tied to my bank account. I have to write a check to the credit card company every month. Debit cards are, as you experience, debited to a bank account immediately.
Well, I have "credit cards" that are not tied to my bank, I have to pay them separately and they have monthly finance charges. But the debit card tied to my checking account can be run through as either credit or debit, but there is no finance charge and the money is immediately debited from my checking account regardless of which way it is run. I don't understand if there is supposed to be some difference, I don't see it.
 
  • #34
Evo said:
Well, I have "credit cards" that are not tied to my bank, I have to pay them separately and they have monthly finance charges. But the debit card tied to my checking account can be run through as either credit or debit, but there is no finance charge and the money is immediately debited from my checking account regardless of which way it is run. I don't understand if there is supposed to be some difference, I don't see it.
Ah. Gotcha. I have a debit card that I use in my bank's ATM for cash withdrawals and it has the option to also be a credit card but I asked that that feature be defeated so have never used it that way and don't know if it would act they way yours does. No reason to think it wouldn't thought. I also don't use it as a debit card at stores, but I assume it functions as any debit card would.
 
  • #35
Here's a good article discussing the difference:
Debit and credit transactions are processed differently: Here’s how MasterCard explained it in an emailed statement to Credit.com: When you use a debit card and your PIN (personal identification number), the transaction is completed in real time, also known as an online transaction — you authorize the purchase with your PIN and the money is immediately transferred from your bank account to the merchant. With a http://www.credit.com/credit-cards/content/how-do-credit-cards-work/, or using a debit card as credit, it’s an offline transaction.

“The funds for offline transactions are deducted after the merchant settles the purchase with the credit card processor and typically take 2-3 days to be reflected in your account balance,” MasterCard says.

http://blog.credit.com/2015/01/what-happens-if-i-swipe-my-debit-card-as-a-credit-106688/

In terms of deciding what to pick, i think the retailer would prefer you select "debit" because it is cheaper for them and they get their money faster. If you have a debit card it probably doesn't matter much to you, but your bank may offer different terms depending on the transaction type. So you should check to make sure you are getting your cash back bonus or whatever.

If using a credit card, it is easy: never, ever make a "debit" transaction unless you need it to get physical cash because there is usually a fee and interest starts right away.
 
  • #36
russ_watters said:
Looking at my checking account, I can tell the difference between the two:
-Transactions that were rung-up as "credit" transactions say "Debit Card Purchase" and take 1-3 days to withdraw the money from my account.
So on your credit purchases you're getting no more than 3 days of credit before the loan is repaid? Most credit cards allow up to 30 or so days before you have to repay the loan, with or without interest.

Usually people hold a VISA debit card for one reason only: because their bank will not provide them a VISA credit card, and this is because under the criteria of income and assets they are judged to be credit risks. Unlike ATM cards, the VISA debit card can be used internationally and is accepted by most of the merchants who already accept VISA credit cards. Unlike ATM debit cards, the VISA debit card offers the cardholder protection against faulty purchases, etc.

The holder of a pure debit VISA debit card doesn't face the question of whether the purchase should be as debit or as credit, simply because the bank won't provide them a line of credit.
 
  • #37
NascentOxygen said:
Usually people hold a VISA debit card for one reason only: because their bank will not provide them a VISA credit card, and this is because under the criteria of income and assets they are judged to be credit risks.
Here your bank gives you a debit card and people use it instead of carrying cash, I consider it the same as cash, and I no longer have to write checks, but using it does not reflect on your credit report, so I also have a few credit cards to use to build up my credit rating and also take advantage of perks that they offer.

The holder of a pure debit VISA debit card doesn't face the question of whether the purchase should be as debit or as credit, simply because the bank won't provide them a line of credit.
Is this like a pre-paid card where you deposit money into the credit card account to then use it like a credit card, but it's actually drawing from your money that you deposited, they are not extending you credit?
 
  • #38
NascentOxygen said:
So on your credit purchases you're getting no more than 3 days of credit before the loan is repaid? Most credit cards allow up to 30 or so days before you have to repay the loan, with or without interest.
There are two types of credit cards. The traditional one is linked to a line of credit, which is the one that gives you about a month before you have to repay it if you want to avoid interest charges. There are also combination credit/debit cards linked to bank accounts. These aren't really credit cards because the money gets pulled from your bank account within a few days. Retailers prefer you use the card as a debit card because it's cheaper for them, while the bank would prefer you use it as a credit card because they make more money that way.

I don't really see the advantage of having a "credit" card tied to a bank account. It just seems like a convenient way for a crook to drain your bank account if they happen to find a card you lost.
 
  • #39
Evo said:
Is this like a pre-paid card where you deposit money into the credit card account to then use it like a credit card, but it's actually drawing from your money that you deposited, they are not extending you credit?
Yes, it's impossible to "overdraw" on a debit card because it draws on only those funds you already have in your linked account, and the POS computer consults your bank before each transaction is accepted. I think there are no fees or charges associated with purchases made using the personal debit card issued by your bank.

If you use a prepaid credit card from a store I think you'll find there are various fees and charges associated with each purchase made using it. The advantage it offers is that it has no connection with your bank account, so criminal misuse cannot cause havoc by draining your savings.
 
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  • #40
NascentOxygen said:
Yes, it's impossible to "overdraw" on a debit card because it draws on only those funds you already have in your linked account
In the US, many or most banks offer "overdraft protection" which borrows from the bank temporarily if your account doesn't have enough funds to cover a transaction (check/cheque or debit card). There is a stiff fee which averages about $35 per transaction. Banks apparently make a lot of money from these fees.

Consumers are still getting hit with huge overdraft fees (CNN, 2015)
 
  • #41
NascentOxygen said:
Usually people hold a VISA debit card for one reason only: because their bank will not provide them a VISA credit card...
Well...I have a Visa debit card from my bank mostly because my bank doesn't issue single purpose ATM cards anymore. And the convenience/flexibility thing:
Unlike ATM cards, the VISA debit card can be used internationally and is accepted by most of the merchants who already accept VISA credit cards. Unlike ATM debit cards, the VISA debit card offers the cardholder protection against faulty purchases, etc.
I'm not sure about the fraud protection (my bank has it, but I'm not sure it is inherent in debit cards), but yes, the other nice thing is that unless you want to, you only really need one card. Though these days, the only common type of purchase I can think of that only does "credit" type purchases and not "debit" type purchases is restaurants.
The holder of a pure debit VISA debit card doesn't face the question of whether the purchase should be as debit or as credit, simply because the bank won't provide them a line of credit.
Again: the way you worded that is confusing and implies something that isn't true. I think you mean that regardless of what you pick, the money gets debited from your account. Sure: that's determined by the account type. But "face the question" implies the transaction terminal won't ask. That isn't true: It doesn't matter which card you have, at the point of sale, the terminal will ask you if you want to make the transaction as a "debit" transaction or "credit" transaction.
 
  • #42
jtbell said:
In the US, many or most banks offer "overdraft protection" which borrows from the bank temporarily if your account doesn't have enough funds to cover a transaction (check/cheque or debit card).
Just to add some complexity, I think it depends on the type of transaction. My checking account is linked to my credit card for overdraft. So if I write a check or have an automatic withdrawal that overdrafts the checking account, I get a cash advance from the credit card. But I don't think it will do that if I try to do an ATM withdrawal; I think it will reject it.
There is a stiff fee which averages about $35 per transaction. Banks apparently make a lot of money from these fees.
Some credit unions won't charge fees, which is nice. :cool:
 
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  • #43
russ_watters said:
Again: the way you worded that is confusing and implies something that isn't true. I think you mean that regardless of what you pick, the money gets debited from your account. Sure: that's determined by the account type. But "face the question" implies the transaction terminal won't ask. That isn't true: It doesn't matter which card you have, at the point of sale, the terminal will ask you if you want to make the transaction as a "debit" transaction or "credit" transaction.
It's a redundant button press. For a single-purpose card it is immaterial which is pressed. (Though it is a long time since I deliberately pressed the wrong one just to prove this.)
I'm not sure about the fraud protection (my bank has it, but I'm not sure it is inherent in debit cards),
By protection I meant consumer rights. If you discover your purchase is defective and the seller refuses to refund or replace, then if you purchased with a bank brand EFTPOS card it is as though you paid with cash. (Bad luck). But if you purchased using a VISA debit card (funds still taken directly from your savings account), then VISA can flex its muscle and retrieve your money for you from the recalcitrant seller. (The same protection as holds for purchases using VISA's credit card.)
 
  • #44
russ_watters said:
I don't know if there is a language barrier here, but in the US a "debit card" and a "credit card" are the same physical card. They only differ slightly in their financial linkages and indeed the same card can often be used in either mode. We can discuss the intricacies of each or...

If you are just asking whether people use cash or cards, it is personal preference, but I tend to use cash only for small purchases and cards for everything else.

Russ, there are protection issues at hand. Thieves are reading readers at gas pumps. If you've used a credit card, you're covered for any fraud. If it was your debit card, you're in for a fight with your bank. Maybe things have gotten better, but in the past, debit card holders were on the hook.
 
  • #45
russ_watters said:
I don't know if there is a language barrier here, but in the US a "debit card" and a "credit card" are the same physical card. They only differ slightly in their financial linkages and indeed the same card can often be used in either mode.
The difference between my Australian cards is that the pure debit card displays underneath "VISA" in barely discernible print "DEBIT CARD", whereas the credit card just shows "VISA".

As far as the user is concerned, the only difference I run into is that at the supermarket I can pay for groceries and receive a handful of cash if I use the debit card, but cash out is not available if I pay using credit. The only way to get cash if all you have is a credit card is to go to any bank and ask for a "Cash Advance", and the interest rate is high.

I assume there still exist combo credit-debit cards like the one I used to have. Maybe people find it easier to manage their finances when they have separate cards? I limit my debit card's exposure by using it nowhere except in supermarket machines when I need cash and in ATMs, because fraudulent use of its details could empty my credit union account in an instant.
 
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  • #46
NascentOxygen said:
The difference between my Australian cards is that the pure debit card displays underneath "VISA" in barely discernible print "DEBIT CARD", whereas the credit card just shows "VISA".

As far as the user is concerned, the only difference I run into is that at the supermarket I can pay for groceries and receive a handful of cash if I use the debit card, but cash out is not available if I pay using credit. The only way to get cash if all you have is a credit card is to go to any bank and ask for a "Cash Advance", and the interest rate is high.

I assume there still exist combo credit-debit cards like the one I used to have. Maybe people find it easier to manage their finances when they have separate cards? I limit my debit card's exposure by using it nowhere except in supermarket machines when I need cash and in ATMs, because fraudulent use of its details could empty my credit union account in an instant.
I think there are some differences between cards in the US and in other countries.

Last week I was looking over my card accounts and I noticed that my Discover card had a slightly higher APR than my other cards, although the balance on the card is zero. I called and asked if the rate would ever decrease, or if I should just close the account, and maybe reapply for a lower rate in a year or two. They said no, they would give me the next 12 months at ZERO APR, and then I could call and negotiate rates after the free 12 months, would that be ok? Uhm, HELL YEAH. Of course, I probably won't be charging anything and carrying a balance, but just in case, it's nice to have. I wonder if I should call my other cards? Oh, and I get cash back rewards for using my card even though it doesn't cost me anything. There is no annual fee, I would NEVER pay an annual fee.

Oh, and I've only had the Discover card for a year, so it's not like I've been a treasured long time customer.
 
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  • #47
NascentOxygen said:
...

As far as the user is concerned, the only difference I run into is that at the supermarket I can pay for groceries and receive a handful of cash if I use the debit card, but cash out is not available if I pay using credit. The only way to get cash if all you have is a credit card is to go to any bank and ask for a "Cash Advance", and the interest rate is high.
...
That is good to hear. But how do the cashiers charge your purchased items ? (using your debit card)
 
  • #48
Pepper Mint said:
That is good to hear. But how do the cashiers charge your purchased items ? (using your debit card)
Purchases and cash out are paid by real time direct debit from the savings account to which the VISA debit card is linked.
 
  • #49
NascentOxygen said:
Purchases and cash out are paid by real time direct debit from the savings account to which the VISA debit card is linked.
OK, I thought if your purchases were $100.33 for example then you would get back 67 cents (real "coins" real cash) as your payment were rounded up to $101, which was odd to me when you paid them with your card.
 
  • #50
Pepper Mint said:
OK, I thought if your purchases were $100.33 for example then you would get back 67 cents (real "coins" real cash) as your payment were rounded up to $101, which was odd to me when you paid them with your card.
Cash out saves you going to the bank or to a bank's ATM. You say to the supermarket cashier "I'd like to buy this basket of groceries ($100.33) and I'd like $200 in cash, please", so $300.33 is debited from your bank savings account, you depart carrying groceries and $200 cash, and the transaction costs you no extra in supermarket or bank fees/interest.
 
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