For merchants and consumers alike, the benefits of using credit cards vs. debit cards can be a little murky. Both options have their draws and drawbacks, depending on the individual and the situation. For today’s post, we thought we’d try to weed through some of the red tape to give a little insight about credit cards vs. debit cards.

Debit Card Benefits

In the simplest terms, debit cards are as close as you can get to paying cash while still using a card. Debit cards are tied directly to your checking account. This means that when a debit card is used for a purchase, the money is taken directly from your account.

For individuals who want to avoid the risks of credit card debt or are trying to stick to a very strict budget, this is the main draw of using a debit card. Debit cards prevent you from spending beyond your means since the money comes directly from your account.

For merchants, accepting debit cards is a no-brainer. Because debit card transactions travel directly to the customer’s bank account, they don’t involve the credit card processing networks. The relative simplicity of processing debit cards makes it cheaper than processing credit cards. This difference in cost is why most POS systems give customers a choice between a debit and credit purchase.

Debit Card Drawbacks

Overall security is the biggest argument against debit card usage. Debit cards simply don’t provide the protections that come with using a credit card. If your card is stolen and someone uses it to make fraudulent purchases, the money comes out of your account immediately. Making matters worse, consumers only have two business days to dispute fraudulent charges. Under the Electronic Funds Transfer Act, consumers are protected from fraud exceeding $50. However, this protection jumps to a loss of $500 if you fail to report it within 48 hours.

With such a limited window and an immediate loss of funds, debit card losses are generally much more difficult to deal with.

Credit Card Benefits

Arguably the biggest benefit of using credit cards over debit is the additional security. The Fair Credit Billing Act (FCBA) provides substantially better protection than the Electronic Funds Transfer Act. Consumers can dispute fraudulent charges on their account as well as charges that are the result of merchant error.

The threshold for loss is the same, at $50, but instead of 48 hours you have 60 days to report the charge. Credit cards also don’t take money directly from your account, so a fraudulent loss doesn’t impact you immediately the way a debit loss would.

There are also endless other benefits and perks that can come with credit cards which are never on the table for debit card users, including:

• Purchase protection
• Extended warranty
• Avoiding fees when traveling
• Return protection

Credit Card Drawbacks

For consumers, the obvious drawback of using credit cards comes from the risk of getting into debt. Credit card debt is a such an issue in America that many millennials are avoiding credit cards entirely.

For merchants, credit cards mean paying more for transactions. Transaction fees vary based on the type of card, and processing costs can get complex, confusing, and expensive pretty quickly. Luckily, processing with Pineapple Payments comes with unmatched processing savings as well as transparent pricing to make accepting credit cards a painless experience.

Bottom Line

From a security perspective, credit cards are the obvious winner in the debate of credit cards vs. debit cards. However, for those who are budget and debt conscious, debit cards are the clear winner. Both options rely on consumer awareness and responsibility to be truly successful.

For merchants, accepting both methods of payment are vital to being successful in today’s economy. Credit and debit cards are both major payment methods used by billions of customers each day. Choosing not to accept them simply isn’t an option in the 2018 market. Luckily, here at Pineapple we have the tools and expertise needed to make processing these options simple. Get in touch with us today to learn about how processing with Pineapple can make taking credit AND debit cards a cinch.