While you can use aÂ debit card toÂ pay for almost all the things you would use a credit card for, these cards aren’t the same type of thing. AÂ debit card is tied to existingÂ money, either prepaid on the card itself or in your savings orÂ checking account. A credit card lets you make purchases on credit, and you won’t be able to do this with aÂ debit card.
Can You Use YourÂ Debit Card as Credit?
When youÂ pay at the register, you’re often asked whether you’re making aÂ debit or credit payment. This isn’t a question about whether you’re paying with existingÂ checking account funds or if you’ll be borrowing theÂ money from a credit card lender. It’s a question about how you want theÂ payment processed. And most of the time, yes, you can use yourÂ debit card as credit at check out.
What Happens When You Use aÂ Debit Card as Credit?
When make aÂ purchase and select to process yourÂ payment as credit, it’s an offlineÂ transaction. “The funds for offline transactions are deducted after the merchant settles theÂ purchase with the credit card processor and typically take 2-3 days to be reflected in your account balance,” MasterCard says.
According to MasterCard, when you use aÂ debit card and your PIN (personal identification number), theÂ transaction is completed in real time. That’s also known as an onlineÂ transactionâ you authorize theÂ purchase with your PIN, and theÂ money is immediately transferred from your bank account to the merchant. These areÂ debit card transactions.
But in reality, the difference betweenÂ debit and credit transactions have little real impact on your bottom line. There may be some differences inÂ fees paid by the retailer or processor, but thoseÂ fees are rarely passed on to the consumer directly.
Some individuals choose to use their debit cards as credit at the register to avoid having to enter their PIN. Itâs commonly believed that this creates some additional securityÂ against someone learning that number and having one more piece of information to supportÂ credit card fraud.
While you certainly want to protect your PIN, simply being aware of who is around you and keeping the keypad covered duringÂ debit transactions can help keep you secure if you do decide toÂ pay this way. It may seem like an unnecessary precaution, but you can never be too careful when it comes toÂ debit card fraud.
Can I Use MyÂ Debit Card if I Have NoÂ Money?
One thing that’s important to note is that you can’t usually use yourÂ debit card for credit. If you are short onÂ cash, your credit card still works if you have available credit on it. If there’s noÂ money in your bank account, yourÂ debit card may get declined when you attempt toÂ pay. So make sure there’sÂ cash in your bank account anytime you use yourÂ debit card.
There’s one exception to this rule. Some banks offerÂ overdraft protection. If you qualify for this protection, the bank covers your charges up to a certain amount and you simply rectify the situation later. That way, you avoid potentially embarrassing declines â for a cost inÂ overdraft fees, which can be $15 to $30 perÂ overdraft.
Can I Use MyÂ Debit Card as Credit at Walmart?
Whether or not you can choose toÂ pay as credit with aÂ debit card depends on each retailer andÂ payment system setup. Many WalmartÂ payment systems are set up to allow this, but they default to debit. When this happens, tell the cashier you want toÂ pay as credit or select the option for changingÂ payment method and choose toÂ pay as credit and sign for your purchases instead of entering your PIN.
Does Using MyÂ Debit Card Build Credit?
Paying with yourÂ debit card doesn’t really impact yourÂ credit score, regardless of theÂ payment type you select. That’s because yourÂ debit card is simply a stand-in forÂ money you actually have on hand (or in the bank). It’s not credit and doesn’t provide any type of illustration of your likelihood of making payments in a timely manner or using credit responsibly. Therefore, it won’t impact yourÂ credit history.
If you use yourÂ debit card to overdraw your bank account on a regular basis or do so and leave the negative balance long-term, it could negatively impact yourÂ credit score. Banks do report checking and savings details like this to the credit bureaus.
The Bottom Line on Debit Cards as Credit Cards
Whether you use yourÂ debit card asÂ credit or debit, the funds will still be withdrawn from yourÂ checking account. You can use yourÂ debit card to make aÂ payment processed as credit, but you can’t use yourÂ debit card for credit in most cases. And even when you can, it’s via the limited fail-safe ofÂ overdraft protection, which is not meant for regular use and can be quite expensive.
Debit cards are wonderfulÂ money-management tools that provide a lot of modern convenience. But for many people, it’s a good idea to have at least one credit card in your wallet too for those times when debit just doesn’t quite cut it. Just make sure to check yourÂ credit score, understand how credit cards workÂ and apply for the card that provides you the best perks at the lowest cost.
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