Debit or Credit? I just don’t get it!
I know; your check card looks like your credit card. They both have the Visa logo in the lower right hand corner. They both possess a 16-digit number and both have personal identification numbers encoded on the magnetic strip on the back. Let’s not forget the holographic dove above the Visa logo. That, however, is where the similarities end. These cards perform very different functions. Let’s see if I can clear up the “debit or credit” options available on your check card for you, okay?
I’ll start with the ATM feature of your check card. I’m sure you know how that works. You put your check card into the ATM, enter your PIN and transact business. You can withdrawal cash, deposit funds, transfer money and view your account! That’s the easy part, right?
Next you can use your check card as an “electronic check.” Here’s how it works: you’ve decided that you need to buy school supplies. After making your merchandise choices you take them to the cashier. She rings you up and you give her your check card. She will probably ask “debit or credit” at which point you will respond “debit.” Depending on the store’s equipment you, or the clerk, will slide your card through a machine. You then enter your PIN to authorize the transaction. The money for the purchase will be taken out of your account and put into the store’s account. That’s simple enough, yes?
Stay with me, this is the tricky part. After leaving the store you decide to get some lunch. You walk into your favorite restaurant and have a satisfying meal. After eating, your server brings your bill. You hand him your check card and he will treat the transaction like a credit card because it has the Visa logo………but it’s not a credit card! This is the very same card you used with your PIN at the ATM and the school supply store. The difference is that because they don’t have the ability to enter your PIN to authorize the purchase, they process it like a credit card and use your signature to authorize that transaction. Get it? It’s the same card. You’re still “writing an electronic check.” A credit card account is a loan and you would be borrowing the Credit Union’s money if you used your credit card. When you use your check card you are using your own money.
Cool, huh. If you’ve already gone through Independent Advantage this information was clarification of what you’ve already learned. If you’ve never been to Independent Advantage, there’s so much more I could tell you about how to move forward with real understanding of your finances and financial services that may be available to you. Sign up today…..It’s free!
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Member's accounts are insured by the National Credit Union Administration (NCUA) at least $250,000.
