Credit or debit?

Jenna, Vice President, Operations

“Will this be credit or debit?”  You may have heard this common question at the grocery store, department store or pharmacy.  Since a debit card looks like a credit card, but works like a check or ATM card, you may be confused about how to decide.  You’re not alone.


If you are paying with your Pacific Service CU Visa check card, for example, when you choose “debit,” you authorize a transaction by entering into a keypad your personal identification number (PIN).  You may not know, however, that you can opt instead for “credit,” to authorize a charge by signing for the purchase.


There are three ways to examine your options: cost, convenience and exposure to fraud.



The cost of either option is usually the same to you regardless of how you process your payment.  Retailers, though, generally prefer that you opt for PIN transactions because they don’t have to pay the interchange fee to the credit card company and they are immediately credited from your account.



To receive cash above the cost of your purchase, or “cash back,” you will have to choose the debit option and use your PIN.


Members often tell me that they use their PIN to speed along the line more quickly.  With today’s technology there is normally no delay in processing credit transactions. For a small purchase such as a cup of coffee, a PIN-based transaction may be a good and efficient choice.  However, for larger purchases using your signature to process a credit transaction gives you added protection with retailers and protects your exposure to fraud through Visa’s operating rules and systems.


Fraud Risk

Fraud is the biggest concern today.  There is higher risk of information theft when sliding your card through a store terminal and then entering your PIN.    Conversely, by signing for your purchase, the retailer doesn’t have your PIN and you create a better paper trail in the event of fraud.


More importantly, when you sign for your purchases instead of using your PIN, you are automatically covered by Visa’s Zero Liability coverage. That means you pay nothing in the event of fraudulent activity. Furthermore, Visa’s cardholder protection policy requires all financial institutions issuing Visa products to extend provisional credit for losses from unauthorized card use within five business days of notification of the loss.  That means you won’t have to wait for resolution on a dispute before you get your money back.


Bottom line:  Your signature has value.

So, the next time you’re asked “credit or debit?” choose credit.  It provides greater safety and security for you and greater revenue for the credit union, which, in turn, allows us to provide greater value to loyal members, like you.

3 comments on this post.
  1. Susan:

    This is a great article with does a wonderful job of explaining the difference between debit and credit. I points out the benefits to me of selecting credit.

  2. F.T.P.:

    Great information. It’s really useful. Thanks

  3. Cindy:

    This is a great “refresher” article. I have been asked and really did not know the difference. Thank you, =)

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