Paper or Plastic?

"Credit or debit?" That's the new question cashiers are asking at grocery store checkout counters.

They're asking this because many of us now have a new type of debit card from our bank or brokerage -- one that looks like a credit card because it has a logo from Visa or MasterCard (American Express, Diners Club and Discover don't offer debit cards).

These new debit cards can be used two different ways. One way is as an ATM card, either to withdraw cash from an ATM or make a purchase at a store that accepts debit purchases (this is when you tell the cashier, "Debit," or press the debit option on the keypad at the cash register). The other way is similar to a credit card in that you simply sign the transaction receipt the same way you would for a credit card purchase. Either way, however, the money to cover your purchases is withdrawn immediately from your checking or brokerage account.

Debit cards, also called check cards, have become a way of life for many consumers. When you use a debit card, the purchase is deducted directly from your checking or brokerage account -- just as if you had written a check. And instead of getting a credit card bill at the end of the month, your purchases are recorded on your regular bank or brokerage statement.

So it would seem that these new Visa or MasterCard debit cards offer convenience and versatility that plain old logo-less debit cards and ordinary credit cards don't. However, this convenience comes with certain risks, and there are some security issues you need to understand before you use your debit card freely.