In the finance world, when we talk of debit and credit cards, they are two big subjects to be analyzed. It is quite true that they have several similarities like, both contain a 16 digit number, both have a pin for access, both have CVV code, both have a EMV chips, and several other things.
But this does not make them completely the same things. For people who love trying new things like me, I believe you have already thought of using your debit card as credit card, or even or credit card as your debit card.
Funny right, but it is normal to think like that, and even the creators and some specialists have also thought of that, may be because you have some cash in your debit card, but has been programmed for something else and want to make a purchase using credit.
Well, keeping all the scraps aside, we will be talking today about how to use your debit card as your credit card, or the other way around. Stay tuned as we bring you our article proper.
How to Use a Debit Card as A Credit Card
Actually, many people will say you cannot use your debit card as a credit card, and several others will say otherwise. And according to me, I won't give you a final thought right now. You will read from below and you will see if it is actually the case.
First of all note that, When making a purchase and you have to choose “debit” or “credit” to pay for a debit card transaction, the money will still be withdrawn from your checking account. But contrary to other debit card transactions, it won't be done immediately, but will take about 2 to 3 days to complete.
What Happens if You Use Your Debit Card as Credit?
When you are about to make a payment and you have to choose between "credit" and "debit", and you are trying to use your debit card as credit, then you will have to choose "Credit."
1. After you have selected credit, the transaction will not be completed in real time as usual, but rather will it be done offline. The merchant does mark your transaction as a credit transaction and it is processed by the system as such (just as if it where a credit card). That is why you won't have to put in your PIN when you choose "credit."
2. At this level, the transaction will be marked as "Pending" in your bank account. This simply means the transaction has been activated, but the payment is not yet completed. But immediately your bank analyses the transaction and "authorizes" it, then the funds are immediately debited from your checking account.
3. This method usually take about 2/3 days to be completed, though it can also be done the same day, but not at that exact time since it takes time to be authorized. While this is the case when you use a debit card as credit card, for credit card, you get a bill each month and you decide how much you have to pay.
So, the debit card card will work in this case like a "Buy Now Pay Later" but it is done automatically without you deciding how much to reimburse.
And so, when you swipe a debit card and choose “credit,” the full amount of the purchase will eventually be pulled from your bank account.
What About the Fees?
When you usually just use your debit card normally, and then choose debit, you will be asked to put in your PIN, and then the amount will be deducted and thats all "With no Fees."
But when you decide to use the "Credit" option, then the first thing is that, they won't ask for your PIN as usual. And when they later on deduct the amount from your checking account, they include fees for the transaction.
So this is kind of a win win situation for them: In fact they even want people to use this method, because the fees will be theirs and you will be on the loosing side. It is true that it might not be much when you look at it, but imagine making 10/20 transactions as such monthly. The fees add up to an amount and starts showing big numbers.
And so, if you do not want to pay for any fees, my advice is that you use a credit card as credit, and a debit card for instant debit which comes with no fees.
Which is the Better Option?
After all of this, if you're still unsure with what to do, then you should analyze your way of doing things financially.
1. If you’re a master budgeter and would prefer not to put in your PIN every time you make a transaction, then choosing credit is a just okay and a very good option.
2. On the other hand, choosing debit is tends to be a better option if you don't trust yourself to keep track of your receipts on a daily basis. In that case the transaction is completed instantly and then you check and know how much is left in your account.
3. What of Security? Yea, everyone wants his/her finances secured, but some people get too scared and do not want to take any risks. If that is the case for you, then opt for a credit card transaction using the "credit" option.
This is because with credit cards, your pin is safe, and the amount is not deducted directly from your checking account, keeping your bank account safe too. This reduces risk and improves security.
4. For me, I prefer you use your debit card at the ATM only. And when you want to make purchases, you can make it with cash in hand, or with a credit card. You will see that this way you are on the security page, and then you will be able to track your spending easily too being in a win win situation.
Right now, the ball is in your colt. It is all up to you to see which one favors you more, and which one you will prefer to use.
Differences between Debit Cards and Credit Cards
A. Debit Cards
First of all, you should know that as the name states, debit cards are cards that funds are instantly deducted/debited. And since debit cards are always linked to your bank account, then funds will be deducted from your checking or savings account.
- You won't be permitted to borrow with debit cards as it is done with credit cards. The funds are debited directly from your bank account.
- Debit cards also offer the convenience of credit cards and many of the same consumer protections when issued by major payment processors such as Visa or Mastercard.
- With debit cards, the Personal Identification Number (PIN) is very important and should be kept safe from others. If someone has your PIN, then they can easily access your account and withdraw funds.
- Debit cards are also great when it comes to fees. The fees on debit cards are very few. You might have to pay some small amount for mobile banking and some other few transactions, but it is very minimal. But this does not apply to (prepaid debit cards).
B. Credit Cards
A credit card unlike a debit card, is not linked to any bank account, whether checking or savings account. What they do is that, they allow you to borrow money from a financial institution, typically a bank, so that you can make purchases, transfer balances, or withdraw cash up to a certain limit.
When you use a credit card, you’re borrowing money, and you’ll need to pay it back with interest if you don't pay the balance in full each month. That is why when you get a credit card, you provide a certain amount you will repay every month. And if not respected, interest fees apply, and your credit score too comes to play.
Credit score here is kind of like a rating that makes other banks or lenders to see if you are trustworthy or if you could just borrow and then disappear (scam).
Also, since the credit card is not linked to any bank account, then a PIN is not required because the card is kind of always empty and just acts as a representation or identification. Nevertheless, when it comes to security, credit card are more secured that debit cards.
This is simply because these are transactions that are not linked to any other account and if you have a bank account, then your account does not run any risk. Even though credit cards require something to be used as colateral.
Well, Credit cards are of different types. They are issued in the following variety of categories:
- Standard cards: No annual fee and basic credit line.
- Rewards cards: Offer points, miles, or cash back based on spending.
- Premium cards: Offer perks like concierge services and airport lounge access, but often come with higher fees.
- Secured cards: Require a deposit to act as collateral.
- Balance transfer cards: Help transfer debt from one card to another, often with low introductory rates.
- Charge cards: No preset spending limit, but balances must be paid in full each month.
Closing Remarks on How to Convert Debit Card to Credit Card
We never know what will happen when we do not track our transactions and keep an eye on how much we have in our accounts. When about to purchase something, you might be tempted to choose debit or credit for payment.
And so, for security reasons, we prefer you get a credit card and complete these payments using your credit card, or you withdraw funds from an ATM with your debit card, and then pay with cash.
And if you are ready to try new things, then you are free to try this method, by using your debit card as credit, though the funds will still be deducted from your checking/savings account.
Take note that, the debit card can be used as credit because it already has funds and is linked to checking account. However, credit cards can't be used as debit since it will need instant debit which is not the case for a credit card which borrows.
And lastly, it is important that you always keep tabs on your finances or on your bank account before and after making any transactions or purchases.