Two Types of Debit Cards

There are two type of debit cards depending on how you authorize the transaction.

PIN-based Debit Cards

ou provide your personal identification number, or PIN, at the time of sale. PIN-based debit can only be done through a credit card terminal or POS software system with an attached pinpad.

To access your account at a store terminal, you must punch in your personal identification number (PIN), as you would at an ATM. The system checks your account to see if it has enough money available to cover the transaction

Signature-based Debit Cards

These cards usually look like a credit card with Visa or MasterCard logo and resemble a credit card transaction. You sign a receipt for the purchase, as you would with a credit card. Because the transaction occurs ˇ°offlineˇ± meaning the funds are not deducted from your account in real-time.

The card-swipe terminals at checkout counters often display an initial message asking you to key your PIN. If you want to sign for the transaction instead, you may have to press the terminal's "cancel" button, then select "credit" rather than "debit."

Which Type Do You Prefer?

Some banks offer both types of debit cards, and some put both debit functions on the same card. PIN-only debit cards offer greater security because it's more difficult for unauthorized people to use them. Cards that can work both in the PIN and PIN-less methods offer more flexibility, especially when dealing with merchants who do not have the equipment needed to process PIN transactions. In either case, the funds are automatically deducted from your account within a short time.

If your debit card works with either a PIN or a signature and the store accepts both, you choose which way to use it at the point of sale. If you choose debit on the merchant's terminal and "swipe" your card through, you will be asked for your PIN. If you choose "credit" on the terminal and swipe your card through, you will be asked to sign a receipt. Credit" does not mean that you will be billed, as with a credit card. The money will be debited from your account automatically.

Consumer advocates often recommend people to choose PIN-based direct debit cards, since the PIN adds a layer of protection against identity theft.

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