Choosing at Checkout: Debit or Credit

Grocery bag paper

It’s a common question asked at the checkout counter, “debit or credit?” You may wonder what’s the difference, and most importantly, which one do I choose? Here are some things to think about the next time you use your debit card and need to decide whether to swipe and sign or enter your PIN:

What is a PIN-based transaction?

A PIN-based transaction, or debit, is when you use your Personal Identification Number (PIN). A PIN is the four digit number that you select when you activate your debit card. After swiping your debit card, your PIN is used to authorize the amount that will be debited from your account.

When you choose “debit” during checkout, the money will immediately come out of your checking account at the point of purchase. As part of this transaction, you also have ability to request cash back. This saves you a trip to the ATM and the possibility of incurring ATM fees. Learn more about avoiding ATM fees.

What is a signature-based transaction?

A signature-based transaction, or credit, is when you sign for a purchase. Unlike a PIN-based transaction, your signature authorizes the amount to be debited from your account. By selecting this option, you are opting for your money to be deducted from your checking account, but the process will be delayed. The delay occurs to ensure that sufficient funds exist in your account. The transaction should appear on your account in 2-3 days. When you select credit, you are unable to receive cash back.

Which one should I choose?

If you select debit, you risk someone acquiring your PIN and depleting your account if he or she gains access to your card. An advantage of selecting “debit” is that your money is immediately deducted, so keeping your accounts balanced is easy.

If you select credit, you eliminate the risk of someone acquiring your PIN. In this instance, your funds will not immediately post to your account, so tracking your account balance may require more attention.