What is the difference between the 'credit' and 'debit' options when using your debit card?  If you use the 'credit' option, does that mean your debit card all of a sudden becomes equal to your credit card?  Depending on what option you choose, does the money come out of your account faster?  Will the bank charge you a fee when selecting 'credit'?  Let's set the record straight.

Is there a difference between the 'credit' and 'debit' options merchants give you when using your debit card?  The simple answer is, yes, but not much.

The money comes from the same place.  However, how fast it's deducted from your account will be determined by which option you choose.  Selecting the 'debit' option will deduct the money from your account immediately and will also allow you to keep better track of what's going on with you account.  The 'debit' feature will, in addition, allow you to get money back if you are short on cash.

The 'credit' option doesn't post to your account immediately and could take up to 3 days to be withdrawn, allowing you time to get money into your account.  Plus, the 'credit' option usually gives you points just like a real credit card (which your bank may or may not offer).

In terms of using a PIN versus signature, there is basically no difference in security these days.  Both methods are just as safe in most cases.  On occasion, some merchants may only offer you the PIN option, but very rare these days.

Behind the scenes, the 'credit' and 'debit' transactions are handled much differently.  The merchant has to pay more depending which option you select.  The fee for 'credit' transactions are based on a percentage of the sale.  With 'debit', the fee is a set amount.  So your bank wants you to select 'credit' as that's where they make the most money off you.  Merchants like it best when you pick 'debit'.

It's good to know the difference between debit card 'credit' and 'debit' options, but for the majority of your daily transactions, it doesn't really matter which option you select when using your debit card.

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