Do you know the difference between the simple phrase "will that be debit or credit"? I didn't know until I listened to the Clark Howard consumer radio show recently. It seems that when consumers answer the "debit or credit" question with the word "credit" this is a godsend to the banking industry. Banks that issue these hybrid debit cards are collecting huge fees from the cards that sport the Visa® or Master Card® logos on them. Retailers and services that accept these hybrid debit cards are paying a premium in fees to the banks as they would with regular credit cards. If you answer, "debit" and punch in your PIN code the banks profit drops nearly to nothing and the retailer pays less fees. Guess who will eventually pay the bill for goods and services if all the retailers pay more fees?

Most people don't realize that the bank card issuers collect fees from the retailer for the privilege of accepting their cards and then pay a little "something something" to Visa® and Master Card® for their help with the process. These fees have to be absorbed by the retailer somewhere, which eventually causes them to raise their price of goods and services to compensate for the bank fees. Do you remember when there were only ATM cards? Credit card privileges were reserved for those that were credit worthy and represented a lot smaller percentage of the retailer's overhead. Now one only needs to fog a mirror to be able to flash plastic at his or her favorite convenient store.

A lot of consumers have been tricked into thinking their debit card is really their credit card, and the banks are laughing all the way to the…well, the bank. The major differences between the "hybrid" cards and traditional credit cards are the liability issues. Credit cards are backed by your good credit; debit cards are backed by your checking account. Most, and we mean all but a very few, banks will not reimburse cardholders for all fraud related charges as traditional credit card issuers normally will. Another large difference is when you buy a bad product or service and would like to dispute the payment. Most credit cards have a mediation or stop payment policy that favors the cardholder, debit cards notta. If you charge it, you bought it.

With the rising cost and higher risks associated with debit cards we at DirectBanc.com recommend that most consumers use a regular credit card for day-to-day purchases, especially over the Internet. The disclaimer here is responsibility, for this to work in your favor you must be disciplined enough to pay your balance monthly within the grace period. Nearly all credit cards have a grace period of around 25 days, which is more than adequate for most budgets.

In the coming days I believe that savvy retailers are going to begin to lean much more heavily toward the debit card side of this issue. Even recently I have noticed fewer stores asking me the question and just pushing a keypad toward me at the time of purchase. The debit or credit issue really didn't matter to me either way before I realized how the system worked and "the man" got paid. Now every time that I am asked "credit or debit" I remember who's making the profit and who is ultimately paying for it and then I dial for dollars! Aubrey Clark is an Editor for DirectBanc.com - Low Interest Credit Card Section