March 3, 2021

Bucks Blog: A Credit and Debit Card: 2 Cards in One

Courtesy Fifth Third Bank

It’s one of those things that makes you wonder why it wasn’t available before. Fifth Third Bank has just introduced Duo, a piece of plastic that works as both a debit card and a credit card.

Fifth Third, based in Cincinnati, says that while various institutions have been testing the cards, it is the first to formally offer it to consumers. Research with its own customers suggested that there was a significant demand for the two-in-one cards, said Stephanie Honan, a spokeswoman for Fifth Third. Many customers use both type of cards — debit for smaller purchases, say, and credit for larger purchases they want to pay off over time. So, she said, customers like the idea of being able to choose credit or debit while carrying just one card.

Here’s how it works: First, you have to have a checking account at Fifth Third, since debit cards are linked to checking accounts. Then, if you want, you can apply for the Duo card, just as you would apply for any credit card.

When you go shopping, you decide how you want to use the card at checkout. After you swipe the card, the terminal prompts you to choose “credit” or “debit.” If you select debit, you type in your PIN, and the funds are withdrawn from your checking account.

If you choose credit, you sign for the purchase, and the cost of the item is charged to your line of credit.

As long as you choose credit, you can earn rewards points for your purchases.

(Unlike some multiuse cards that have been tested, however, Duo does not offer the option of paying directly with rewards points. Citibank has been testing such a credit card — called 2G, for second generation — and had been scheduled to make it widely available sometime this year. A bank spokeswoman did not immediately respond to a request for an update on its plans.)

While the Duo cards offer flexibility, you do have to pay attention. If you somehow make a mistake, and hit “debit” when you do not have enough funds in your checking account for the purchase, the item will be covered by overdraft protection — and you’ll pay an associated fee.

The move may also benefit banks in another way, says an analyst’s report from Barclays Capital. The report suggests the dual-use cards, which do not offer a signature debit option, represent a move by banks to encourage more use of credit, rather than signature debit, because signature debit transactions have been cited by the Federal Reserve as having higher fraud costs than the PIN version. “As a result, we believe that banks are beginning to explore steering customers toward credit card transactions in place of signature debit transactions,” the report from the analyst, Darrin Peller, said.

Does a dual credit and debit card make sense to you? Would you find such a card useful?

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