Why Choosing Debit or Credit Is Like Picking Salad Dressing

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Paper or plastic? Low-fat or low-sodium? Window or aisle? Those are the tough questions in life. Today, we'll help you with credit or debit? And maybe ranch or bleu cheese?

What kind of dressing would you like on your salad? For most people, it’s a simple decision. Not me.

Whenever my server asks me that question, I tense up like I’ve just been asked the big question on Who Wants to be A Millionaire. Usually, I struggle to decide if I want ranch or bleu cheese.

This particular time, my server just politely stood there, tapping a pen on her ticket book while I tried to make up my mind. “Well, um, let’s see…”

Meanwhile, on the other side of the table, I looked over at the wife just in time to see her roll her big brown eyes.  After 15 years, she’s used to it.

Choosing debit or credit: Does it really matter?

I bet many  folks get that same deer-in-the-headlights reaction when they run their debit card through a merchant’s card machine at the checkout counter and are confronted with the dreaded “debit or credit?” question.

There’s nothing to be ashamed of. After all, this choice is more complex than ranch or bleu cheese.

Your decision to pay “credit” or “debit” simply tells the bank how you want to process the transaction. Whichever you choose, the money comes directly from the bank account tied to your debit card.

If you choose “debit,” you’re asked to enter a personal identification number (PIN) and the funds are immediately removed from your bank account.

On the other hand, if you choose “credit,” the transaction is verified via your signature and the funds might not be taken from your account until the end of the day – or sometimes even later. That’s because merchants often process these transactions in a “batch mode” with other credit card transactions. That’s it, really.

Now I know what you’re thinking: That’s great, but when I’m using my debit card, what’s the better choice? Credit or debit? Well, it depends.

My reasons for choosing “credit”

Most merchants prefer their customers use the debit option because they pay a smaller fee to the banks when we enter a PIN. Even so, I almost always choose “credit” for the following reasons…

1. More consumer protection. I can take advantage of credit card liability protections and mediation processes, which in my experience have been very pro-consumer.

2. Credit card rewards. More and more debit cards are offering rewards – but only if you select credit.  If you enter your PIN, you can usually kiss those rewards goodbye.

3. Potentially higher transaction limits. To prevent a thief from draining your bank account too quickly, banks usually impose a daily purchase limit. In rare instances, you may be able to get around this limit by choosing credit.

4. More convenience. I conducted a very unscientific experiment and discovered that it takes me an average of 2.1 seconds to enter my PIN but only 1.6 seconds to sign my name. So anytime I can swipe my card without having to enter my PIN, I’m a happy camper.

My only reason for choosing debit

I can think of only one instance for selecting debit over credit – when I need cash back. And although it’s the only reason I ever choose the debit option, it’s a particularly good one because it allows you to avoid those irritating ATM fees.

Meanwhile, back at the restaurant…

Much to my wife’s embarrassment, I continued to hem and haw over the salad dressing until she finally offered me a life line. “Do you want me to choose for you, Len?”  Would I ever!

“Yes, please, Honeybee.  Thank you.”

And with that, the heavy burden of choosing between bleu cheese or ranch was lifted off my shoulders as she quickly ordered for me.

“He’ll have Italian.”

Stacy Johnson

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