What Is the Difference Between a Bank Card, Credit Card and a Debit Card?

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Gaining access to your money is now more convenient than ever. It is no longer necessary to write a check or make a withdrawal when you need money. All you have to do is pull out a card, swipe it, and your transaction is complete. Swiping a card is convenient, but it can get you into trouble. You should understand what type of card you have before using it.

Debit Card

  • A debit card works the same as cash or a personal check. The money you spend comes directly from your bank account. The transaction declines if there is not enough money in your account to cover the cost. Some banks even place a limit on the amount of money you can withdraw per day.

Credit Card

  • A credit card gives you a line of credit. There is a specific amount of credit on the card. If you go over the limit, your transaction will decline or your will be charged a fee. Credit card purchases can end up costing more because the account accumulates interest if not paid off in full when the bill arrives. In addition to interest, there are late payment fees and over-the-limit fees.

Bank Card

  • A bank card is a card that can only be used at an ATM. According to PIRG.org, the card is often referred to as a plain old ATM card. This type of card existed before debit cards. Your debit card might have a Visa or Mastercard logo, which means you can use it anywhere Visa and Mastercard are accepted. Before that was possible, a bank card bearing your bank's name was all there was.

Specifics

  • A debit card provides quick access to your funds. You do not pay interest, and you can use it to shop online and offline. A credit card is convenient as well -- if you can make your monthly payments. Falling behind in credit card payments costs you late fees. You also pay interest on the amount you owe. Late payment fees can also ruin your credit history. A bank card helps control spending. Since you cannot use it in many places, you are less likely to make impulse purchases.

Applying

  • You do not apply for a debit or bank card. You bank issues them to you upon request. Since they are attached to your checking account, your credit history is not important. The money in your account secures all of your purchases. You do have to apply for a credit card. The creditor considers your credit history and current financial situation. A credit card is not secured, and you must repay everything you borrow.

References

  • Photo Credit credit card and hand image by Warren Millar from Fotolia.com
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