i thought merchants pay a single fee($0.35) per debit transaction, but a fee + % for credit

or i guess for credit, the credit card processing company takes more of a %

and using PIN, its kinda verifying ur identity(unless someone stole ur card AND pin), harder to say ur card's been stolen

I always wondered why I was often asked "debit or credit" after swiping my debit card...

Though for the most part, I agree with the benefits of exclusively using a credit card, and I made that switch awhile back. If you're responsible and actually have the money to spend, then there's really no reason to use a debit card at all (aside from those intermittent, annoying CA gas stations that only take debit cards...).

if I used my debit card for purchases, I would certainly go the pin method to help retailers I like. I've only found one so far that cares though.

It will really likely make them more money at both ends. The merchant will pay more for the processing and the consumer who doesn't balance their check book will be more likely to get overdrawn and rack up fees. A debit transaction is instant and will be declined if the funds are not available. The credit transaction may not post right a way allowing you to make more transactions afterwards, even a debit transaction and then end up overdrawn once all the charges hit. Stick to cash or debit, you will stick it to the banks and likely save yourself money in the long run.

When you do a signature debit, you're protected against scams from visa/mastercard's network. Not so when you do a pin debit.

Unfortunately, sometimes the bank will make up that money in other ways, such as charging the cardholder to perform the transaction. People should check with their banks before changing their habits in this area. I would hope that they would have noticed such charges already though, if the card was being used without care for the processing method.

When I use my debit card at the grocery store, pharmacy/drug stores, or anywhere else where the swipe terminal is up high, I always opt for the signature debit. I just don't feel comfortable enterting my pin when the person next in line is hovering near me.

@Sandaasu: This is true of TCF bank about 4 years back. TCF bank was charging 75 cents for using your PIN at a POS checkout. Of course, they didn't charge anything for 'sign on the line' since they were getting their pound of flesh out of the merchant. I dropped them for a credit union which doesn't do those kinds of shenanigans.

They just want to get everyone off the the cash , Banks do not want to hold alot of cash in there branches.

A lot of the small stores I go to around LA charge you to use debit if it's under $10, but if you use it as a credit card they dont. Maybe because they are smaller they dont get the same processing deal as large businesses do?

Another reason is overhead. PIN transactions require realtime authentication with bank, which is a more expensive transaction for banks. Signature transactions do not, and cost the banks less.

@Sandaasu: If your bank does that, you really need a new bank.

My credit union is pushing a new interest earning checking account with really great rates. The catch
1. you have to have direct deposit
2. you have to get your statements electronically
3. you have to check your account balance on-line at least once each month
4. you have to have 12 signature debit transactions each month.

Meet the requirements each month and they pay 4% on your balance. Miss the requirements and the percentage falls to 0.5%

first, I have no charity for most retailers like grocers, car rentals, airlines, fuel stations, or drug stores like CVS or Walgreen's.

If your bank doesn't have a Points program for your credit/debit card you should find one that does. Over the last 5 years I have used my card as a CC and gained a very nice high end DSLR camera, a gorgeous LCD 42" TV, and two round-trip tickets to Jamaica.

I also use this card to pay for Comcast online, ATT online, and any other business I have that will take a CC for that purpose.

Navy Federal has a signature debit (VISA) and a pin debit card. Different cards with different procedures....all coming out of my checking account. I always wondered why...now I know!

thats odd. My chase account specifically waives my monthly account fees so long as I make a certain number of pin debit purchases per month.

What really irritates me is when you select Credit on the POS terminal, and they try to force it to a PIN-based debit. You then have to know to hit cancel to get it to process as a signature-based transaction. I don't have a problem with retailers trying to get people to use debit if it's cheaper, but programming your card-swipe terminals to default to PIN-based debit regardless of what option is selected is pretty scummy.

@taking_this_easy: I pay the same as credit, 1.98% + $0.26 but I imagine the provider makes more on these than regular credit.

PIN debit transactions are a flat cost say $0.35.

Signature debit is a % of the sale amount say 1.50%.

So it can be cheaper to the merchant for small sales if treated like a credit card.

Large sales would be cheaper as a PIN transaction.

In this case a $10 sale is cheaper to the merchant as a "credit card" sale than PIN debit sale. $0.15 vs $0.35

Merchants need to also consider that monthly network fees may be required to access the PIN networks, say $10.

Rule of thumb for a merchant is "the bigger the sale the cheaper a PIN transaction is compared to signature transaction."

I don't know about some of you, but some places actually charge a small fee (Carl's Jr is one of them) to use debit, so I use credit because it doesn't cost me out of pocket.

@jnews: Ha! My credit union used to charge you $3 per transaction if you did a POS transaction as debit instead of credit.

Something else that happens is that with a debit transaction it usually shows up in the account immediately as a pending transaction, while a credit-like transaction has to clear, meaning there's the added likelihood for NSF fees. This is because it's possible a transaction or two could "fall off" and cause you think you have more money than you do, while a debit transaction usually posts within 24 hours.

I seem to remember on Consumerist a couple months ago there was a link to an off-site Flash widget that compared the various merchant transaction fees depending on the cost of the purchase and the type of card (credit, debit, etc) used. I remember that debit cards were cheaper for merchants in most circumstances. Anyone remember where it was located?

@roshambo: Debit cards will not be declined if the funds are not available, they will get overdrawn just like a checking account (which banks love because they get to smack you with a $35 fee)

Our bank just started charging a POS (point of sale) fee for using debit cards. At $1.25 a pop! Apparently, this is a fairly new fee that banks are starting to charge. We get around that by using our debit card as "credit."

Our bank just started charging this fee, and we were not notified. Or if we were it was buried deeeep in some monthly statement. More and more banks are starting to charge a fee for using your debit w/ pin. So, watch your statements for that POS fee.

Using a PIN because you "like" a retailer vs credit doesnt' work unless many people do it. The costs (realized or unrealized costs) of the customers using credit over debit/cash/etc is already factored into the goods you purchase, so whether you try to "help" by paying with pin doesn't matter...you're already helping by purchasing the item with the cost of credit purchase built in. I say use the system and get whatever rewards you would garner from using the credit feature. If your bank doesn't give you debit card rewards like that then this might be a good time to shop around :)

@robodomo: Not with my debit card. If the funds aren't there, transaction declined.

I use credit when using my debit card because I get cashback...not a lot. I can't remember what the "reward" is for using one, but there is one.

When I worked fast food in high school, our manager would direct us to ask "Is this debit?" when scanning a card. The thinking was if they weren't offered the choice of credit, they would pick debit if indeed it was a debit card. Also, it was cheaper for us to run a PIN transaction than a signature one.

@TWinter:

I have the same thing, it was 5.5% when I signed up last year. I assume they can afford it via the merchant fees or whatever. However on my account PIN based transactions still count towards the 12.

Chase makes more money when you sign.

USAA gives me a cash rebate for signature debit transactions. So I sign.

@taking_this_easy:

Well in some cases the merchants screw themselves. Take just yesterday when I was picking up lunch from Arby's. If I use my card as a debit card, they charge me a $0.35 convenience fee and I have to use the shifty-looking device on the counter. But if I tell them it's a credit card, I pay nothing extra. I don't even have to sign!

No brainer there.

@Sian:

All the merchants I go to that ask me: "debit or credit?" I usually tell them "It's either one, doesn't matter".

They invariably run it as a credit card.

The only exception are those places that charge fees to use debit cards.

this would explain why ikea offered me 3% off last night to use debit instead of credit.

@iluvhatemail: This is because Visa & Mastercard do not alow their merchants to charge a fee to use "credit".

@rworne: Some consumers prefer to use their pin and will pay for it and merchants can charge a fee for this. Visa & Mastercard prohibits such charges.

@roshambo: That is not true of all banks, for example at US Bank you can overdraw your account with Pin based or even ATM transactions.

The bank controls the processing system, I don't see why you would thing that a PIN transaction would be unable to overdraw an account.

@johnva: A lot of banks are starting to do that. US Bank charges $0.25 for PIN transactions: [fastapp.usbank.com]

Use a (real) credit card. Benefits:

*Purchase protection
*Extended warranties where applicable
*Charge dispute rights that may be superior to merchant's return policy
*Cash back or airline/hotel/points rewards
*Easy tracking of expenses (this is true for debit cards as well, but not so much for cash)
* 20-40 day float before you have to pay (more if you're willing to pay interest, though there are plenty of limited-time, zero interest cards out there)

Given the above, it makes little sense not to use a credit card, if you have one.

My state (Minnesota) only allows credit transactions. If we push "debit", the sale does not go through and must be redone. We don't even have the option of selecting "debit".

@Skeptic: Well not exactly, the bank still must allow the credit transaction to be approved, thats why the little machine still has to process the transaction and it can be declined.

@VA_White:
Yep, I've got USAA and get the same. Not a huge cash rebate, but it adds up and makes for a nice little surprise at the end of the month!

@tedyc03: or you could use a checkbook register and not have a problem to begin with.

@Sandaasu: Some banks offer a carrot instead of wielding a stick, like USAA, which gives 0.5% cash back on signature transactions.

My credit union always pushed the slogan "Use your pen, not your PIN" because it saved them money.

@TWinter: what credit union?

Personally I always select "Credit", merchant can't charge my ass a fee.

@rworne: It doesn't make much difference to me in the abstract, but I always say "credit" because Chevy Chase charges me an exorbitant fee if I do the purchase as "debit!" So I guess they've decided they're going to get their money, one way or another.