Candice Choi

Debit or credit? Bank’s new card does double duty

By Candice Choi
Associated Press / August 30, 2011

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It’s plastic that does double duty as a credit card and a debit card.

Fifth Third Bank, which operates 1,300 branches in the Midwest and South, is offering a new card that is linked to both a checking and credit card account. The Cincinnati-based bank says the Duo MasterCard is the first to offer the split functionality.

The claim may confuse those who mistakenly think their cards can already act as both credit and debit cards. But when cashiers ask debit card users if they want to make a transaction “debit or credit,’’ what they really want to know is whether you want to punch in your PIN or simply sign to complete the purchase.

Either way, the transaction comes out of your checking account.

The Duo card, by contrast, is linked to both a checking account and a separate credit card account. Cardholders would get separate monthly statements for the two accounts.

To draw funds from the checking account, the cardholder would select the debit option at the register and enter a PIN. The card can also be used to make withdrawals at ATMs. Fees on Fifth Third checking accounts range from $7.50 to $15, but can be waived if customers meet certain conditions, such as maintaining a minimum balance.

To charge a purchase on the credit card account, customers would select the credit option and sign to complete the transaction. They would no longer be able to sign for debit card purchases. All online purchases would also count as credit card transactions, which may be a significant drawback for some customers.

The interest rate on the credit card is 0 percent for the first 12 months, after which it jumps to between 13 percent and 24 percent, depending on the applicant’s credit history.

As convenient as some may find the idea of a single card, it is also a way for Fifth Third to deepen customer loyalty. If you’re not impressed with the idea of having to carry one less piece of plastic, you may find that you can secure better offers for either your credit card or checking account. MasterCard declined to say whether it was working with any other banks to offer more dual-purpose cards.

Candice Choi writes for the Associated Press.