Debit Cards

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Debit Cards

Debit cards are an interesting topic because they have evolved over the years, and have started to behave more and more like credit cards. There are essentially two types or categories:

PIN-Based

This is the classic card that your bank issues to you when you get a bank account. Whenever you use it in a store, the terminal will prompt you to enter your PIN (Personal Identification Number). If you don't remember it, you're basically out of luck.

Flagged

Look at the front, bottom right-hand side of your card. Does it have a Visa or MasterCard logo on it? If so, this is what the industry refers to as a "flagged" card. What does this mean? Well it essentially means that when you swipe your card in a store, you can either:

Select "debit" and it will prompt you for your PIN (Personal Identification Number).

Select "credit" and you will not be prompted for your PIN, but rather you'll be asked to sign the receipt as you would for a credit card.

When you're in a retail store, the experience can be different depending on whether you have a class PIN-based card or a flagged card. Note that with either type of card, the money is withdrawn from your bank account immediately (unlike a credit card where you get a bill later that you then have to pay).

On the other hand, when you use your card directly with your wireless carrier, the experience doesn't noticeable change. The reason why I say that it's not noticeable, is that there are actually different regulations that companies must follow depending on whether you're using credit or debit. Many companies these days will only accept flagged cards. The reason why is that these cards can be treated in exactly the same way as credit cards. In fact, if you tell them it's a credit card, they'll never know the difference (of course, your card will have to be the flagged type of card for it to work as a credit card).

If your wireless carrier does have an option for debit card, and you select that option, your experience will vary slightly from the credit card process due to these regulations. Chances are, though, that unless you study the two processes carefully, you'll never notice.

One good tip to take away here is to note that if your wireless carrier does not say that they accept debit cards, don't worry. If you have one of these flagged cards, just pretend as though it's a credit card and you'll be on your way with no problems!

I have to admit that I don't know exactly when banks will issue you a flagged vs. non-flagged card. I'm not even sure how common non-flagged cards are these days. If you have specific questions about this topic, or if you have information you can share with me, please don't hesitate to contact me.

One of the great benefits of using your debit card is that you don't have to worry about getting a bill like you would when using a credit card. So the risk of not paying your bill and negatively affecting your credit is not there.

Don't have a bank account and so no access to debit? A prepaid debit card may be a great option for you. Click here to learn more!

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