Debits and credits

Debit or Credit? There’s a Difference, and It Matters

Should you swipe that card as debit or credit?

Most of us probably have a default that we stick to, but many also probably have no clue what the difference is between the two.

I know I didn’t.

I used to always swipe my debit card as credit, because it had a cash-back feature that gave me like 5% back once I’d spent a certain amount every month.

That’s not to be confused with the cash-back option, which allows you to withdraw a limited amount of cash from the register as you pay. For that ATM-like feature, you need to swipe it as debit.

Ultimately, if you have a debit card, it also doubles as a credit card, and you can do either when you pay.

Swiping as debit issues an immediate transfer of funds, whereas if you swipe your debit card as credit, it will take a few days–just like with a normal credit card. Both methods take the money out of the same linked bank account, and both are contingent on you actually having something close to that amount of money in your account.

So, short-answer: you can do either, and in some cases, the merchant may make that choice for you by only allowing for one or the other (usually because of fees they may have to pay for offering the service).

But if you really want to get the most out of your card, you need to look into what features it comes with.

As I mentioned earlier, I used to have…