Debit or Credit?

Debit or Credit? The Real Difference

We’ve been there: you’re at the register paying for that long-coveted purchase. You swipe your ATM/Debit card and the touch screen asks, “Credit or Debit?” If you’re like most people, you make a choice without investing too much brainpower, but do you really know the difference between one choice and another? When is credit better than debit – and the other way around?

If you’re paying with your ATM/Debit card, one thing is always the same: any credit or debit transaction you make will result in money coming directly out of your checking account. “Credit” transaction – meaning you have signed for your purchase rather than punching in a PIN – are not true credit; payments do not become part of a revolving account as a regular credit card transaction would. In this way, credit and debit charges on your ATM/Debit card are largely interchangeable, and in most cases either choice is perfectly acceptable.

There are a few differences, however:



  • You want increased fraud protection. ABEFCU’s ATM/Debit MasterCard has a zero liability policy on debit card purchases that are processed as “credit.”
  • Your purchase is big. Because of smaller limits imposed when using PIN transactions, larger purchases are more likely to be authorized using signature debit. Keep in mind that there are still limits to the “credit” side of an ATM/Debit card; it’s best to confirm this limit prior to making that big-ticket item purchase.
  • Earn reward points. ABEFCU’s ATM/Debit MasterCard cards offer reward points for every qualifying retail purchase. Reward points add up fast, and are redeemable for brand-name merchandise and travel rewards – including airline tickets! So when you are asked for your PIN or prompted to choose “credit” or “debit”, choose “credit” and sign.




  • You want cash back. If your shopping day isn’t even half over and you don’t have the cash for a triple latte, this is the choice for you.
  • You like the security of using PIN. PIN based transactions are less likely to be fraudulent than signature-based ones.
  • Your transaction is small. ATM/Debit cards carry a limit on purchases and withdrawals. If you’re purchasing a big-ticket item, you may exceed your daily spending limit – or send the remainder of the day’s transactions into limbo.
  • Your account is flush. Debit purchases are instantly taken out of your account, just like an ATM transaction. There’s no time to “beat the credit union.”


Bear in mind that some retailers charge a fee for either one or both “credit” and “debit” services. To avoid excess fees and unwelcome surprises, ask the retailer what fees may apply prior to making a choice between debit and credit. You’ll also avoid excess fees by making sure you have adequate funds to cover any and all purchases you make, credit or debit, before you hit “enter.” Adding a Courtesy Pay or overdraft charge to the purchase of the price of any item can turn the best bargain into a splurge.