Tip For Debit Card Use
Almost everyone uses a debit card these days. There's certainly something to be said for the convenience it provides. In fact, some banks are electing to get rid of ATM cards and only supply debit cards to customers.
Here's a plain and simple tip for using your debit card: Don't enter your PIN to complete a transaction at a store. Instead, select "Credit" (or sometimes "cancel" on point-of-sale machines) and SIGN the sales slip.
Why? The bank charges the retailer differently for these two types of transactions. The fee to the retailer is less on a PIN transaction, therefore the bank needs to make up the money somewhere. How do they do it? They charge you a small fee on each PIN transaction.
Given the higher volume use, these fees can add up over time, so why not just get rid of them completely?
Comments
I’m sorry to differ with you, but the cost to the customer is the same regardless of whether they choose to use a PIN or signature on their debit transactions. Because the merchant has to pay different fees (depending on which method is chosen) you will see them push you in one direction or the other. I have seen a very few stores up-charge for transactions paid via PIN on small transactions, but this not a bank charge. I go in to further detail here.
This may be true in some cases, however, there are a large number of banks that will tack on a quarter or more if you use PIN transactions (At least one of mine does). These may be waived for people with more expensive accounts, or accounts with higher balances. But for those of us using the "free" checking accounts are often relegated to paying for the privledge of using our PINs.
My bank doesn't charge me any fee when I do a debit card transaction if I do it either way.
Neither my old bank or my new bank have ever charged me a fee for a PIN based transaction, my boyfriends bank doesn't do so either.
I've never been charged for PIN transaction either.
Another reason to choose credit over debit is that your PIN number is stored (in theory, temporarily) in the retailer's system and is thus far more exposed than if you use it only on your bank's ATM network.
Of course paying cash avoids all these problems, and you'll spend less too.
My credit union enters your name into a monthly sweepstakes by doing what the article states. However, even if you do not deny a pin, there is still no charge.
I can confirm that chevy chase bank charges 25 cents for paying with PIN, 0 for paying with credit. It is the first thing they told me at the bank, use credit when paying otherwise you get charged a fee.
My bank used to charge a fee for PIN transactions, but they no longer charge. They treated it just like I had used another bank's ATM machine. Credit has always been free.
If you're going to pay with plastic, it's usually better to use a real credit card if you can. You get float on the money, rewards, and fraud protection.
The only time I use my bank card is if I want to get extra cash back to save myself a trip to the ATM.
Thank you all for commenting. As the author of this post, I'd like to respond to a few comments:
1) Rather than using "They" in the end of the third paragraph, it should have been edited to "Many banks". It is true that not all banks charge their customers for using a PIN transaction. I apologize for this error.
2) Michael, I would like to know the source of your information. According to many reputable sources (Federal Reserve, bankrate.com, Kiplinger's, etc.), banks can, and many do, charge for PIN transactions when using a Debit card.
3) Many commenters posted other benefits to using the "credit" or "signature" function of a debit card. There were some very good pointers. Thanks.
Respectfully,
Grant
I agree with most people here, my bank has never charged me for PIN transactions. In my opinion, if your bank charges for something that most other banks don't, it's time to start looking into another bank.
I use a PIN transaction because it's quicker (admittedly only by a few seconds) to enter my PIN rather than to wait for a printout and sign it. If the stores get charged less when I do this, then even better. I'm all for saving businesses money - good shopping karma, I guess.
The only thing I'd recommend when doing a PIN transaction is checking for the store's policy on this type of transaction. A handful of stores do charge extra for PIN transactions. I find that these are mostly gas stations and drug stores.
This distinction holds true in the USA where you get asked whether it's a credit (sign) or debit (PIN) purchase. However in the UK even credit card users must type their PIN nowadays.
It is true, banks do charge the retailers a fee for each transaction. for example some banks will charge a retailer (supermarkete etc..) a $2 fee for transations the customer made using he/she pins number, and a $3 fee for a signature transaction.
When we sign instead of using our pin number during a trasnsaction, Does signing help improve our credit history??
my banks Wachovia and Provident have always charged $.75 per debit transaction and nothing for credit. So, credit it is.