Different Kinds Of Bank Cards

There are a number of different kinds of bank cards a person may come across in the course of their financial lifeATM cards, debit cards, credit cards, and prepaid debit cards.

All of these, as one may gather, work differently – and how they differ is an important thing to know in order to wisely use each kind of card.

The Different Bank Cards You Might See

ATM Cards

These kinds of cards are typically issued by a bank, which aim to provide their customers a greater sense of flexibility in their banking hours.  (If you can believe it, there was once a time when you had to go to a bank teller to get cash!)

For the most part, a customer can use their ATM card to make deposits, withdraw money, transfer money between their accounts, get a cash advance, check an account balance, or even make a loan payment at any given convenient time, day or night.  All of this would be done at an ATM.

Make sure an ATM you use is within your bank’s network or you could be hit with ATM fees.

Debit Cards

These kinds of cards, also issued by a bank, generally combine the uses of an ATM card and a check, in that using a debit card to make a purchase will result in the funds immediately being withdrawn from the bank account.  With a debit card you can make either a PIN transaction (where you enter your PIN code) or a signature transaction (where you sign for the purchase).

You may notice that these cards are backed by either Visa or Mastercard (this is what allows you to make a signature transaction).  Debit card users need to watch that they don’t overdraw (overspend) on their account as there could be steep penalties.  Debit cards retain the same functions as previously outlined for ATM cards.

Credit Cards

These kinds of cards work in a straightforward manner.  There is no bank account from which money is deducted, though there is a limit to how much a person can spend before paying it off.

Basically, the credit is a loan being given to the user of the card.  Generally, the company that issues the card requires a minimum payment on the bill per month and requires, in exchange, a person pay interest on the owed balance, which can be as high as 29% per year.  If you pay it off in full there is no interest.  Credit cards can be very useful but the fact that the money isn’t being drawn from an account can easily lead people to overspend and get into credit card debt.

Prepaid Debit Cards

These are generally accepted as credit cards and are a good option for those with poor credit because, unlike a credit card, it does not require a credit check for approval.

A predetermined amount of money is put into the card balance and can be spent just like any other debit or credit card, until the money runs out.  At that point, it must be refilled with more money before it can be used again.

A prepaid debit card can be a great way to keep on budget as you can only spend what’s on the card.  The drawback, of course, is you are limited to the amount on the card and you must keep track of the balance.

A consumer these days most likely has a number of different bank cards they carry with them daily.  Its important to understand how each works and which card is best for your spending needs.

What bank card do you use the most?

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Published or updated April 15, 2013.


  1. Good common sense info. To add to the list, Secured Credit Cards are like a pre-paid credit card in that your pre-payment acts as a collateral. Unlike a PIN transaction with a Debit card, funds are not taken from your prepayment. You are still required to make payments like a regular credit card.
    .-= MoneyCone´s last blog ..Review of online broker OptionsHouse Part II =-.

    • Great addition to the list! Basically, you give the bank your credit limit up front, possibly in the form of a CD. Its still a credit card but the bank has money equal to your credit limit in case you don’t pay. This is a good option if you have bad credit and need to work up to better credit.

  2. One more to add to the list is a Charge Card. Charge cards are like credit cards, and are usually issued through a credit card company (The biggest I know of is American Express) but the total balance is due at the end of the month, every month. The card has no limit and isn’t on your credit report. The positives about this card are you get all the benefits of a credit card, ie. points, general acceptability, convenience and online management, without the temptation of racking up debt.
    .-= Jesse´s last blog ..Your Guide to Income Based Repayment =-.

    • Charge cards are another one! But I think the lines are blurred these days as American Express has options to pay balances over time. Still, it does give you a greater incentive to pay your balances off.

  3. Thanks so much for the link! I think credit card companies and banks can be crazy with their rules now. It’s nice to know ways to get around things. 🙂
    .-= Mrs. Money´s last blog ..What Would You Do? =-.

  4. I rarely if ever use my debit card – I’m always freaked out about someone using the number to drain my account!

    I almost always use a credit card – my business Amex and our personal Amex tie points in together so we can rack ’em up quicker!

    • I believe if you use signature transactions for your debit card then you should be protected against fraud.

      If I ever go the business card route I’ll have to look into combining the points together!

  5. I hate bank cards!

    I use credit for everything I can.. it simplifies my accounting, and maximizes my rewards. 🙂

    But every bank account I have keeps sending me (and my wife) debit cards that I never use (except for ATM withdrawals). they just clutter my wallet… hmm… now that I think about it, maybe I just have too many bank accounts…

    • I hate when you get cards you don’t want. They should ask first! I carry a couple of key cards and that’s it.

  6. Hey,

    I like the prepaid credit card idea. Even for people with great credit.
    Sure helps prevent spending more money than you have.


  7. Thanks for the clear explanation of each of these cards. I am old fashioned…I still write checks and use cash, and occasionally a debit card. For me, this is the easiest way to stay in control of my money without overspending.

    • Whatever works best for you! There’s is no one way that’s best for everyone. As much as I’d like to leave behind paper checks I still use them from time to time.

  8. I use a Visa debit card through my local bank. The checking account pays 4% interest!

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