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What happens if you use a debit card as credit?

Here’s what you should know about skipping your PIN at checkout.

Yahoo Personal Finance· Getty Images
Sarah C. Brady
·Contributor
4 min read

You probably think of debit cards and credit cards as two totally separate things: One pulls money from your checking account and the other lets you borrow against a line of credit. For the most part, that's correct.

What most people don't realize, however, is that you can choose to use your debit card as "credit" at checkout. That doesn't mean you borrow money to make the purchase, but it does change some aspects of the transaction. Here’s what you need to know about running a debit transaction as credit.

If your debit card has a Visa or Mastercard logo on it, you can use it as credit. To do this, you simply choose "credit" on the PIN pad or in the payment options at checkout. Alternatively, if you hand your debit card to a cashier or server, you can tell them you want to pay with credit instead of debit.

Then, instead of providing your PIN to authorize and complete the transaction, you'll probably be asked for your signature — usually if the transaction is over $25.

If you select "credit" for your debit card transaction, a few unique things happen. The payment is still processed as a debit from your linked checking account, but the transaction will be different from a regular debit purchase in these ways:

  • Processing speed: The payment can take up to three days longer to process since it goes through the Visa or Mastercard network instead of coming directly from your account.

  • Authorization: You authorize the transaction with your signature (usually for transactions over $25) and not your PIN.

  • Rewards: If your debit card has rewards, you might have to choose the credit/signature option to earn rewards or to earn the maximum rewards available.

  • Cash back: Since you don't enter a PIN, you won't be able to get cash back from the merchant.

  • Liability: Visa and Mastercard both provide zero liability, meaning you won't have to cover unauthorized credit transactions on your debit card.

  • Merchant fees: The merchant pays higher fees — averaging about $0.24 per transaction — when you choose credit.

In terms of security, the best option is to tap the card rather than swiping or inserting it, regardless of whether you choose credit or not. That's because the "contactless" tap option protects your debit card data by encrypting it.

Read more: When to use your credit card over your debit card

Using a debit card as credit does not involve borrowing money, so it doesn't impact your credit score. Additionally, information about your debit activity is not reported to any credit bureaus, whether you use the account as credit or not.

Your debit card activity can, however, impact your ChexSystems report. ChexSystem reports contain information about your banking history, including details such as whether your bank accounts have been closed for non-sufficient funds. You can pull your ChexSystems report for free once a year at ChexSystems.com.

Read more: Can overdrafting affect your credit score?

There are a few new debit cards that act like hybrids between debt and credit. These cards have a credit-card-like feature that lets you "borrow" money to cover certain transactions, and then withdraw the funds from your bank account to pay the debt right away. Then the account activity is reported to one or more of the major credit bureaus, which can help you build up your credit score.

Whether or not you use debit cards as credit is a matter of preference. If you want to delay the transaction from processing or you want to earn rewards on a rewards debit card, credit is the best choice. You can also limit your liability by choosing the credit option.

If you want your checking account balance to reflect recent transactions right away, regular debit transactions are the way to go.

Additionally, retailers have to pay fees to Visa or Mastercard when you use the credit option, and payment processing fees are often among their highest costs. On top of that, vendors aren't allowed to inform you of the fees or pass the cost onto you, at least not directly. But you might end up paying extra for those credit fees in the form of inflated pricing.