Should I select credit, cheque or savings?

Information verified correct on October 22nd, 2016

Not sure which button to press? This handy guide will clear up any confusion.

Picture yourself at the end of a big shopping spree. You’ve picked out a wide selection of must-have items to add to your wardrobe, they’ve all been scanned and you’re ready to pay for your purchases. The bill is over $100 so you can’t just tap and go, but you’re faced with an important decision: should you pay from your cheque, savings or credit account?

Have you ever wondered what the difference is between pressing cheque, savings or credit? Read on to find out.

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    Rates last updated October 22nd, 2016
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    Visa $0 $1,000 No ATM fees when you use Bank of Melbourne, St.George, Westpac and BankSA ATMs. No monthly fees if you deposit $1000 into your account each month. Open More

    What’s the difference between credit, cheque or savings?

    Every debit card payment terminal you see at a supermarket, service station or any other retailer in Australia has three buttons: cheque, savings and credit. Let’s take a closer look at what would happen if you pressed each one after swiping your card:

    • Credit. You press this button when you either pay using a credit card, or with a debit card that can also be used as a credit card. Of course, you’ll need to make sure your card is linked to an account relevant to the button you press in order for the transaction to work.
    • Cheque. Press this and the money to pay for the purchase will come out of your everyday transaction or chequing account.
    • Savings. The purchase you make will be charged to your savings account. If there is no specific savings account linked to your debit card, the funds will be taken from your everyday transaction account.

    Does it matter?

    It’s always important to be sure that the funds used to pay for your transaction are withdrawn from the right account. For example, do you want to pay for an item on credit (and run the risk of earning interest on your debt if you don’t pay it off in the next 30 days) when you could pay with money from your transaction account? If your card is linked to multiple accounts, pressing the right button will make a big difference.

    Why it matters

    The button you press will also affect how your payment is processed. Cheque and savings transactions are processed through the EFTPOS system, while credit transactions are processed by Visa or MasterCard. Debit transactions are deducted from your account immediately, while credit purchases are considered “offline” transactions and take longer to process.

    When you pay using your credit card, you get the security benefits of Visa and MasterCard’s “chargeback” protection. This makes it easy to get your money back if there is a problem with the transaction, such as if your transaction is processed multiple times or you don’t receive the goods you pay for, and is paid for by the merchant’s bank.

    Chargeback protection from EFTPOS, meanwhile, is paid for by your bank, so it costs the merchant less. This is why you will see some stores imposing surcharges or minimum limits on credit card transactions, but not on transactions carried out with debit cards.

    This in turn brings us back to another reason why it’s important to press the right button when you pay for a purchase. If there is a transaction account and a credit card account linked to your card, selecting credit could lead to you paying an extra surcharge on top of the purchase price.

    Weigh up the pros and cons




    • You can pay for your purchase on credit, meaning you don’t need to worry about having sufficient funds in your account to cover the transaction.
    • Chargeback protection is provided by your credit card provider.
    • Your bank or card provider will also monitor your card regularly for any suspicious activity or fraud.
    • A credit card surcharge may apply to your transaction.
    • The merchant may impose a minimum limit on the transaction.
    • You will need to pay your credit card debt off in time to avoid being charged interest on your purchase.
    • Transactions aren’t processed immediately, which can be frustrating when fast payment is needed.
    • Transactions are processed immediately.
    • If there are insufficient funds in your account, the transaction will not be completed. This can stop you getting into debt.
    • Because you pay using your own money, you don’t have to worry about earning interest on your debt.
    • Can be confusing. For example, even if you select “savings”, your account may be linked to a transaction account rather than a savings account.
    • If you have insufficient funds you will not be able to complete the purchase.
    • You will not enjoy the same level of fraud protection as is offered on credit purchases.

    Dual-purpose cards

    Some debit cards offer the flexibility to also be used as credit cards. If you have one of these cards and you want to pay by debit, select cheque or savings after swiping.

    If you’d prefer to pay by credit, you can select credit after swiping your card or opt to swipe it over the merchant’s contactless payment terminal (PayPass or payWave). However, be aware that using your dual-purpose card as a credit card will usually attract high interest rates.

    What happens when I make a contactless payment?

    With an ever-increasing number of Australians using cards with contactless technology, tap and go payments have largely replaced the traditional methods of payment for transactions under $100. But which account is the money drawn from when you tap your card?

    If your contactless card is a debit card, the money used to pay for your purchase will come from the transaction or savings account linked to your card.

    If your contactless card is a credit card, the funds will be drawn from your credit card account, regardless of whether there is also a transaction or savings account linked to the card.

    If you have multiple accounts linked to your debit card and you’re at all unsure about where the funds will be drawn from when you make a purchase, contact your bank. Once you’re aware of the differences between using cheque, savings or credit to pay for a purchase, you can make better decisions about how you manage your money.

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    Tim Falk

    A freelance writer with a passion for the written word, Tim loves helping Australians find the right home loans and savings accounts. When he's not chained to a computer, Tim can usually be found exploring the great outdoors.

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