Debit Card Question

[1969912 0]

I have a checking acct. at WaMu, which is now Chase. Also have a debit card for the acct.

So when I went to the bank today, the teller tried to sell me on a sweepstakes thing they just started. The way it works is you sign up first, and then each time you use the debit card you have a chance for that purchase to be paid for by the bank. Every 1,250th card use wins.

Here's the odd thing: The deal only works if you use the debit card like a credit card, i.e. you cannot use your PIN.

Anyone have any idea how/why the bank would benefit from their customers using the cards this way or any other reason why they'd set the rules up that way?

"Once we got to the point where twenty/something's needed a place on the corner that changed the oil in their cars we were doomed . . ."
-NickDG

[Andy9o8 2]

You'd use it as a credit card for a retail purchase, for which the bank gets paid a fee. I assume from context that the bank doesn't get the same fee if you make the purchase as a debit. (That's why some merchants, for example some gas stations, charge more for credit sales than for cash sales.)

[1969912 0]

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You'd use it as a credit card for a retail purchase, for which the bank gets paid a fee. I assume from context that the bank doesn't get the same fee if you make the purchase as a debit. (That's why some merchants, for example some gas stations, charge more for credit sales than for cash sales.)

OK. Makes sense. I always assumed debit transactions had the same fee, but never really thought about it.

"Once we got to the point where twenty/something's needed a place on the corner that changed the oil in their cars we were doomed . . ."
-NickDG

[floridadiver81 0]

I know with my bank if i use my card as a credit card i actually get a small percentage of what i spend back at the end of the month!

"Age has absolutely nothing to do with knowledge, learning, respect, attitude, or personality." -yardhippie
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[JohnDeere 0]

Banks charge (to the store) fee's for both debit and CC's, but they make more off CC transactions.

Nothing opens like a Deere!

You ignorant fool! Checks are for workers!

[shropshire 0]

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Here's the odd thing: The deal only works if you use the debit card like a credit card, i.e. you cannot use your PIN.

Things must be different here then because the customer experience is the same for both card types - we use a PIN for both DC & CCs.

So do you mean the card goes in one of them old voucher impression machines?

(.)Y(.)
Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome

[jcd11235 0]

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Here's the odd thing: The deal only works if you use the debit card like a credit card, i.e. you cannot use your PIN.

Things must be different here then because the customer experience is the same for both card types - we use a PIN for both DC & CCs.

So do you mean the card goes in one of them old voucher impression machines?

In the US, debit cards utilize a PIN, and credit cards require a signature. Internet purchases typically require an additional security code instead of a PIN or signature. Debit cards can typically be used as credit cards, with the cardholder signing or entering the security code instead of entering a PIN.

I have a debit card that offers 1% cash back on all signature and internet purchases, but it offers nothing on PIN based purchases.

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[shropshire 0]

Thanks - it is different here - cheers.


Also, as a side note - most places no longer accept cheques..... which pisses my Mom-in-law off no end.

(.)Y(.)
Chivalry is not dead; it only sleeps for want of work to do. - Jerome K Jerome

[bwilling 0]

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Banks charge (to the store) fee's for both debit and CC's, but they make more off CC transactions.

Lots more. Hence their push to get you to use the card as a CC instead of what it actually is, a debit card. Fees can be as high a 3+ percent to run the card as a CC, or as low as 1/2 percent to run it as a debit card. The money comes from the same place (your account that the debit card is drawn on) and no credit is extended, so the banks make additional money for nothing.

Ultimately, it's us, the consumer, who pays those additional fees the bank makes. Homey don't play that game. I always have them run my debit card as a debit card when I get a choice. But lots of folks just mark the stuff up to cover the fees, then run it as a CC anyway, costing us all money.

edited to add, you're crazy if you think just because your bank gives you a small percentage of the robber baron profits back to you that it's not ultimately costing us all money! It is! It always amazes me that people don't know how this scam works! The only folks that really benefit from running a debit card as something that it's not (a credit card), are the banks!

"If all you ever do is all you ever did, then all you'll ever get is all you ever got."

[DrewEckhardt 0]

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Anyone have any idea how/why the bank would benefit from their customers using the cards this way or any other reason why they'd set the rules up that way?

The banks' credit card interchange fees average 2% of the transaction value. When you choose "credit" in the typical retail environment the bank + credit card company partnership makes as much profit as the merchant.

The banks' charges for on-line debit card transactions can be a flat 10 cents.

When you buy $200 worth of groceries the bank gets some fraction of $4 (I don't know what the split is with mastercard/visa) when you use your credit card and part of $.10.