What is the difference between using debit or credit?

[jen]

With my bank which is a credit union, I am actually charged for using my card as a debit versus credit. It's usually $1 per transaction but that can add up. Out of curiousity, does anyone know why you would be charged like this... I mean with debit the money is taken from my account immediately, not placed in the hold like credit. So why am I charged the $1 fee? I personally would think the other way, but I am definately no accountant and alot of this is very foriegn to me. Thanks in advance for any responses.

[TNShannon]

I used to be with a bank that charged for the use of the debit card...which made no sense, because it was my money I was spending. I switched to another bank that charged no fees when I used the card, and I've been a happy shopper ever since.

I wouldn't give away money to the banks. They are already making interest off your money simply by having it in their coffers, so why should they get more from you? Choose a bank that charges nothing, and offers you a good interest rate on the cash you do keep with them, so that you can both benefit from the financial relationship.

[jebri]

One of the challenging things with debit cards is worrying about identity theft. If you enter your pin, the guy behind you can see what you enter and if he paid attention to your card number, he can empty your account. But I think they put a hold on your money in your account, like more than the payment amount is for, if you choose the other option where you don't enter your pin--another stupid bank rule. I think it's safest to just pay with cash. And it helps with budgeting too, because it's easy to lose track of how much money you have available when it's electronically transferred through a debit card but when you have the cash in hand, you always know what you have.

[angie828]

I do not have a debit card. I feel that if I had one I would use it all the time. I think not having one saves me money. If they do not accept checks and I do not have very much cash I am less likely to spend money, saving it for something I may really need.

[WandaVodlaw]

Credit means that you pay later , Debit you pay now. Hope it helps!

~WandaV

[Barb]

If I am not mistaken when you use your bank card as a credit card I believe that the store is responsible for paying the bank fees, just like a regular credit card. Each credit card charges the store money for the privilege of being able to accept the card. When you use the card as a debit card you should not be charged a fee unless you use it in and ATM machine that is not connected to your bank. If a bank charges for the use of a debit card at a store it is probably a fee for the processing of the payment. Which I think is wrong. You are right Angie, if you use cash instead of a debit card it is easier to monitor your spending habits. Using a debit card almost gives you the sense of having a credit card and you tend to spend more.

[rgordon82]

Debit is paying thru your card that has cash on it which is a good thing. Credit card can give you a lot of debt if you have a higher limit.