Why You Should Use Your Debit Card Like A Credit Card

You may have noticed that your debit card gives you the option to use it as a debit card or a credit card. Some banks will tell you to only use it as a credit card, here is the reason.

What is the difference?

Most debit cards are issued by Visa. If you use it like a credit card, signing your name instead of punching in your pin number, your purchases are insured and your transaction is safe.

Visa will insure all of your purchasing. If your card is stolen and you call right away they won’t hold you responsible for anything the thief buys with your credit card or debit card. That’s part of what all those fees cover.

If you use your card like a debit card, using a pin number instead of signing, then it is like you wrote a check or just drew money out of an ATM (automated teller machine) and you are responsible for any problems that may arise.

Will I be charged interest or extra fees?

No. At least you shouldn’t be. Talk to your bank representative if you need clarification about this.

A while back the United States government made changes and passed regulations so that credit card companies and banks couldn’t overcharge people. They had a system that enabled its customers to use their card, within reason, even if they didn’t have money in their account. The problem was, people were racking up bank charges and fees like crazy mounting up large sums of debt.

Some customers had so many bank fees by the time they got paid they were still broke and on top of it they owed the bank money.

Now you have to sign a contract allowing them to give you overdraft protection. It sounds harmless and wonderful but it isn’t. It’s a terrible bad idea and no one should ever sign up for this because when you do they of course charge you for this privilege. You should, instead, learn to live within your means but that’s another story.

Banks now have to have your permission for any extra service charges above and beyond the usual fees.

How do you use your debit card like a credit card?

Stores don’t want you to use your card as a credit because they get charged a fee. This fee is what funds your transaction insurance.

When you slide your card on those machines if it comes up with a keypad wanting your pin number just hit cancel. It will then role over to a signature pad for credit. Some are different and will ask credit or debit or the clerk might ask you. Always say credit.

Some stores have a limit and if it is under a certain amount you won’t have to sign or use a pin number. Don’t worry it’s still insured.

Credit card stigma

I’ve known some people that didn’t want to use their debit card as a credit because they didn’t want people to think they couldn’t afford their purchases and had to charge them. This is not true and in fact many rich people only use credit cards for all of their purchases so they have less bills at the end of their billing cycle. They just transfer one amount of money for their total transactions that month and they’re done.

This is a carry over from before debit cards and it just made their lives easier not having to fill out and sign a check for each transaction plus that insurance I mentioned above.

No more checks

You almost never see anyone writing checks anymore. I recently saw two different women doing it, one looked to be in her 80’s and the other in her 50’s.

Writing checks holds up lines, many small retailers won’t even take them anymore and it takes up more space in your purse or pocket.

I still have checks for paying those few bills that don't have bill pay online (I live in a rural community), school related costs (I don't trust the school to keep up with cash) or the rare occasion I've ran into people that won't or can't take a card and want a check.

The only disadvantage I’ve found with debit cards is that you don’t have a ledger to keep track of your spending. You can go online but that won’t show all recent transactions especially if it’s a small local establishment.

My husband is a budget analyst and more organized than most. He keeps all of his receipts in his wallet and when he gets home he posts them to a spreadsheet he has on his computer. Many of his purchases are related to our rental property so we have to keep track.

You don’t have to be quite that organized unless you make a lot of purchases and have trouble keeping up with everything you’ve bought. As long as you have a pretty close idea of how much money you have in your account at all times you will be fine.

Don’t store your credit cards or debit cards next to your cell phone

The magnets in our cell phone will demagnetize our credit or debit cards.

I had to replace two debit cards before I realized what was happening. A store clerk asked me if I keep my cards near my cell phone.

“Sometimes. When I go out and carry a small purse I just carry my phone, driver’s license and one or two cards.”

She said that was probably why my card wouldn’t scan.

Our new driver’s license has chips in them too so I’m wondering if that can be demagnetized as well? Just in case I no longer let my cell phone near any of my cards. It’s why they send our cards in those little protective sleeves I never used to keep. I keep them now.