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at Debt Reduction Services

Debit or credit?

credit-card-blue-free-license-per-pixabayIt’s a question we all hear so frequently that we have a tendency to tune it out sometimes:

“Debit or credit?”

Let’s clarify a few misconceptions I have heard over the years before we address this question.

First, running a debit card as a credit card does NOT build your credit. The money still comes directly from your checking account, so there is no lending on credit, hence no reporting of credit usage.

Second, you cannot run your credit card as a debit. Running as debit requires a PIN. The only PIN you get with your credit card would be to withdraw cash. Even if allowed (which is not appropriate in this scenario), this is rarely a good idea. Doing so means that a higher, cash-withdrawal interest rate kicks in immediately (no grace period) and can nullify other grace periods until the balance is brought back to $0.

Third, and lastly for this post, there IS a difference for you, the consumer. With the many widely publicized thefts of customer information at a number of large retailers (from Ebay and Target to Home Depot and Wendy’s – Here’s a great visual on worldwide data breaches), the information we provide at the checkout stand matters to us and our wallets. While generally very safe, our information, if stolen, could mean money out of our pocket (or checking account, to be more precise).

Put it this way, if you were a thief, would you rather have someone’s debit card number or would you rather have their debit card number AND their PIN? Admittedly, a thief could do a lot more with our checking account if he (or, I suppose she) also had our PIN.

So, while using the credit card network to process our payment may cost the store a bit more in fees, it allows us to enjoy a little more peace of mind knowing that our debit card PIN is not hanging around in cyberspace waiting to be hacked.



All the best,

Todd Christensen
Director of Education

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