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Credit, Cheque or Savings explained

Cheque savings credit image

For most of our purchases these days, we usually just tap our Visa Debit or Credit cards and go in silence. But, what would you do when you need to make a purchase above $100?

For most of us, we’d simply tap our card, enter your PIN and go. There is a difference though when you insert your card. This will result in you having to make a decision on what account you would like to use.

The answer is simply when using your Visa Credit card, the option will always be the credit option at the check-out. But when you are using your Visa Debit card you will be asked to select one of three options:

  • Credit
  • Cheque; or
  • Savings

Cheque, Savings or Credit?

Each merchant terminal in Australia when making a purchase has three buttons on it when it comes to account selection. Here’s what it means if you press each one:

  • Credit – Available when using a Credit card or Debit card that is linked to a scheme such as Visa or MasterCard. This is the default selection for contactless transactions, even for purchases over $100 and when making purchases online or over the phone. For example, when using a Visa Debit card, if you insert your card you will be asked to select from either credit or cheque/savings. Pressing credit will still draw the funds from your linked account. When using a Visa Credit card, the credit option will be the default and will use credit available on your account. Transactions performed using the credit option may display as pending transactions on your account which means your account balance and available balance will differ as a result of the purchases you have made until the transactions have been fully processed which can take from two – five days depending on the merchant.
  • Cheque – This button is available when you insert your Debit card to make a purchase.  Selecting cheque will withdraw the funds from your everyday account straight away. This will result in your account balance and available balance aligning subject to whether there have been other purchases made on your account that have used the credit option or funds deposited that may be on hold.  Using this option may result in transaction fees being applied depending on the account you have. If you have a Visa Debit card for an example, you will also have the credit option available.
  • Savings – This button is typically available when your Debit card has multiple accounts linked. For example, if your Debit card has an everyday account and a savings account linked, when you inserted your card to make a purchase, you will be asked to select from either cheque or savings.  If you select savings, your savings account will be withdrawn. Using this option may also result in transaction fees being applied. If you have a Visa Debit card for example, you will also have the credit option available.

Pros and Cons of selecting Credit, Cheque or Savings

Option Pros Cons
Selecting CREDIT
  • Simple to remember and aligns with the default option for contactless transactions
  • Available 24/7
  • You could avoid transaction fees
  • You have added security and transaction monitoring from the card providers e.g. Visa or MasterCard
  • Can use your card instore, online and over the phone, pretty much anywhere your card is accepted worldwide

  • Merchants may apply surcharges for pressing credit
  • Merchants may enforce a minimum transaction threshold
  • Purchases made using a Credit card may attract interest if your full balance is not paid in full each month
  • Purchases may display as a pending transaction until it has been processed
  • Transactions are processed from your account straight away
  • As using your own money, no interest applies to your purchases
  • No money in your account? No purchase. This also means no debt
  • No money in your account? No purchase
  • Depending on the account, transaction fees may apply
  • Only available when you insert your card in-store when making a purchase
  • Not available 24/7
  • Not all cards have the ability to have more than one account linked to them
  • Does not enjoy the added security and protection as selecting the credit option

It’s important to remember that selecting the right account for the way you spend is key. Different accounts will offer different fee structures based on the number and type of transactions you make in a given month.

For example, some everyday accounts, like Greater Bank’s Ultimate Access offers unlimited transactions each month, so long as you deposit >$2,000 in the same month (like your salary). Having no fee everyday transaction account can be a great way to help you save money.

Researching and comparing the right everyday transaction account for you may help you improve your personal finances. 

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