Credit Card versus Debit Card Processing

List and discuss THREE key functions or advantages of how a credit card works.

1) They compile your purchases and / or bills into one location for more easy money tracking.

2) Rewards points give you money back, airline miles, money towards your next bill.

3) Raise your credit score / obtain a credit score to help with further large purchases in the future (home / car / etc.)

List and discuss THREE key functions or advantages of how a debit card works.

1) Rarely have to carry cash / go to the bank / ATM.

2) Faster withdrawls over checks.

3) Allows you to shop online without a third party vendor (although I think this is more risky).

List and discuss the key differences between a credit card and a debit card.

Credit Cards allow you to carry a balance of purchases over from month to month, while debit cards require you to have money in the linked account for the purchase to go through. Debit cards are less likely to smoothly cover fraudulantn purchases and flag them less frequently than credit cards do, so in this aspect they are more secure. Credit cards allow you to buy things you dont have the money for, and assume you will pay, or they charge interest, which debit cards do not do.

Discuss what happens when you use a Debit card as a Credit card.

It becomes an offline transaction meaning that it can take 2-3 days to show on your account, because it needs to be authorized with the merchant, where using a debit card authorizes that transaction in real time with your PIN. Credit card transactions incur fees to the business you are running your card at and sometimes can be passed along to you. Source

When should you use a credit card instead of a debit card?

This is a bit up to speculation, if you can afford to always pay off your credit card, you can use it all the time and get further protection from your debit card (actual cash) being frauduelently used. Credit Cards also offer better purchase protection (usually between 30-90 days) so for high-end or tech items it's good to use your credit card on them. Similarly, you can also recieve extended arranty protection (which can double the manufacturers warrenty), and price protection (to show that you paid too much at the register for something). Source

When should you use a debit card instead of a credit card?

When you want to avoid debt or have a hard time budgeting your money to know what you can pay off with your credit card. Source

Discuss how a Merchant is affected by your choice of "Debit vs Credit"? How do the merchant fees differ between the two types of cards?

It becomes an offline transaction meaning that it can take 2-3 days to show on your account, because it needs to be authorized with the merchant, where using a debit card authorizes that transaction in real time with your PIN. Credit card transactions incur fees to the business you are running your card at and sometimes can be passed along to you. Credit cards have higher percentage fees, and lower interest charges. Debit cards have higher transaction fees and lower percentage fees. Source