Should you use Credit or Debit? #Best Education Page #Online Earning

Hello once again guys, welcome back to the channel.

Hope you're having a great day so far.

So what we're gonna be doing today

is a follow-up video to one that I posted the other day

on the difference between Visa and MasterCard.

And it's another question that I get frequently from people

that's an excellent question and it's one of these

money lessons that you just don't learn in school,

but it's really quite important.

And that is the difference between using debit versus credit

when you're making a purchase with a debit card.

So let me ask you guys a question

if this has ever happened to you before.

You're at the store and you swipe your debit card,

and then all of a sudden on the pin pad

it says credit or debit and then

you basically just take a random guess.

Maybe you cover your eyes and you put your finger down

and whatever one it lands on, you decide on

because most of us have no clue

what is the difference between credit or debit

and why you would possibly wanna use one over the other.

Well, that's what I'm gonna show you guys in this video

is what is the difference and when you might

want to use one over the other.

First of all, this sounds like common sense

but let me just go ahead and make this clear with you guys.

If you're using a credit card,

obviously that can only be used as credit

but it's when you're using a debit card

that you have the option of using it

as credit or debit at certain merchants.

So let's go ahead and talk about

the differences between these things

and maybe one myth that people have that I couldn't believe.

It's kind of unbelievable but we're

gonna share that at the end.

So number one, debit can allow you to get cash back.

If you've been to the grocery store before

and you'd swipe and you use your debit card as debit,

they will often ask you do you want to get cash back.

Now there is one advantage to this

as opposed to going to an ATM and that is the fact that

it's often a little bit cheaper than an ATM fee.

So if your typical ATM fee is around $2.50

you might find that the cash back fee

when you're already making a purchase is just $1.00

and that is because they have a direct connection

to your bank account where they can

withdraw money for you on your behalf.

So if you're looking to get cash back,

always use your debit card as debit

when you're making a purchase.

Second of all, the big one here

is that debit transactions post immediately

while credit transactions may take

a couple of days to process.

And so I hope this is not you guys,

but some people are in a situation where

their bank account is getting quite low

and they may be in a situation

where they're about to overdraw their account.

Well if you're in that situation,

obviously it would make more sense

to run that transaction as credit as opposed to debit

because it will take a couple of days

or it may take a couple of days to post

and in the mean time you can scrape together some money

and put it into your account.

Now the reason behind this is because when

you use a debit card it is an EFT

or electronic funds transfer network

or a direct connection to your bank account.

So they're able to immediately withdraw that money

from your account and give that to the merchant.

It's instantaneous, it comes right out of your bank account.

Now when you use it as credit,

believe it or not you're actually borrowing

that money from the credit card company

whether it be MasterCard or Visa or whoever.

So you're basically borrowing that money from them

where they pay that merchant and then they pull

that out of your bank account.

And that is a couple of day process

to relay through their payment network.

So again, like again like I said

if you really are trying to delay that transaction

from hitting your account, running it as credit

is probably a better idea than debit because with debit

it's going to take that money out immediately.

Third of all, running it as credit may give you

some additional purchase protection.

It's not a lot because basically Visa and MasterCard,

like we said in the other video

have a couple of perks and terms of

you know, rental car insurance or they offer in some cases

extended warranties on their higher tiers of cards,

but most people with the standard MasterCard or Visa card,

there aren't a ton of perks but if you do run it as credit

and you're running through their payment network,

you may have the ability to have some perks or warranties

that go above and beyond what you would traditionally get

if you just ran it through your bank.

But definitely do some research on your card

and what tier credit card you have

to determine whether or not you're actually

gonna get any perks for that.

And fourth and finally this is one

of the old tricks of retail.

I used to work at J. C. Penney for a couple of years

and what would happen is people who made

purchases on a debit card, when they made a return

they could just get cash from us

as opposed to having to get that money

put back onto their bank statement.

And so if that's an advantage to you

where if you're making a purchase

and you just want to get cash for a return,

some stores will allow you to do that

with debit card transactions and it's not going to be

possible with a credit card transaction

because they have to relay through that credit card network.

But anyways guys, that is the difference between

a debit transaction and a credit transaction.

And so the only situations when you'd really

want to use debit is if you wanna get cash back.

Basically any other situation than that,

credit is going to allow that transaction

to take a little bit longer to post

and it may offer you some perks above and beyond

like maybe an extended warranty

or possibly rental car insurance

but definitely do some research on that

and see what your card is offering.

And then the only other time where it might make sense

to use debit is if you're making a purchase at a store

and you want to be able to get cash as a refund

as opposed to putting it back on your card

where it's gonna take a couple of days to process.

But that's it guys.

The one myth I want to share with you too,

I could not believe this, but some people believed that

by selecting credit when using their debit card

that they're building credit for themselves.

That is not true, you have to use

an actual credit card to build credit.

Using a debit card as credit, is not building your credit.

So I hope nobody really believes that

but I saw that online and I wanted to mention that.

Thanks so much for watching this video.

I hope you guys enjoyed it

and I will see you in the next one.

#Best Education Page #Online Earning

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