Why does my debit card have a credit card logo?
Most people naturally see debit cards and credit cards as entirely different payment options. So when you see a Visa* or Mastercard® logo on a debit card, it can be confusing.
Here's why that's becoming more common, and why it's happening.
Here's why your debit card has a credit card logo
With Visa or Mastercard debit cards, even though you see the Visa or Mastercard logo on them, they still act like debit cards in that you're still paying for things directly from your bank account. The big difference is they use the Visa or Mastercard networks to allow you to use these debit cards in places you otherwise probably couldn't.
So they're not credit cards, since you're not borrowing money to make those transactions. Instead, by using the credit card networks, you can use your debit card in more ways.
Credit, debit, or both?
Debit cards are directly linked to your bank account(s). When you make a purchase with a debit card, the money is immediately taken from your account. The easiest way to think about it is that you're spending money you already have.
Credit card purchases don't actually require you to have the money on hand. Credit is a promise to pay later. If you pay your full balance owing within the time allowed, then no interest is charged. But, if you "carry a balance" to the next statement period(s) on a credit card, you can pay very high interest rates for those borrowed funds.
Where can you use debit and credit cards?
One of the other main factors to consider is where you can use debit cards. In Canada, debit cards are widely accepted in physical stores, but you don't see many online stores accepting them. And if you travel outside Canada, your debit card may not be as widely accepted in as many places.
Credit cards can be much more flexible though. They tend to be accepted almost everywhere in Canada that accepts debit cards. They're also used for online purchases, booking travel (like airline tickets and hotel bookings), and have a much higher acceptance outside of the country.
Some people prefer using debit
Some people may prefer to use credit cards for most of their purchases, because credit cards often offer rewards or other benefits that debit cards typically don't. That generally makes sense if you're paying your credit card bills in full to avoid paying interest. If not, then the interest charges can far outweigh the value of any benefits or reward programs.
A lot of people prefer using debit cards for most of their purchases to help them keep a lid on their spending. And not everyone has access to a credit card.
Where can I use Visa or Mastercard debit?
Remember, if you have a debit card that also has a Visa or Mastercard logo on it, it's still a debit card, where you're spending using money already in your account. It also allows you to use that debit card in more places, both online and when travelling.
* Trademark of Visa International Service Association and used under license.
Mastercard is a registered trademark, and the circles design is a trademark of Mastercard International Incorporated.
