Debit Cards
A debit card works very much like a credit card in that you can use it to pay for goods, services or draw money and is often ‘guaranteed’ by one of the major credit card providers, such as Visa or MasterCard. The essential difference between a debit card and a credit card is that a debit card only allows you to use a specified sum available on your account – for example, the balance on your checking account. For this reason debit cards are also commonly known as ‘secured’ credit cards.
Charge Cards
Again similar to credit cards, charge cards allow you to pay for goods and services and your purchase is ‘guaranteed’ by the card issuer – for which Amex and Dinners Club are the main issuers. However, one difference between these types of consumer credit cards is that a charge card will not allow you to carry over a balance to the next statement period and you are required to repay the balance in full on each statement payment date. As such, charge cards do not charge you interest, but rather make their money charging customers a membership fee. Also, note that some charge card companies do not set limits on how much their customers’ can spend, so their use can be a little tricky to control if you are financially disciplined!
Store Cards
The final type of consumer credit is known as a store card. Store cards vary and are a hybrid between credit cards and charge cards in that some let you carry over a balance while others do not. One common factor, however, between store cards is their use is normally limited to making payments in the chain of store of the issuer. As such, they are an ideal cheap vehicle for stores to move merchandise which may not have been sold had you not used the store card.
You may freely reprint this article provided that the author bio and live links are left intact.
A debit card works very much like a credit card in that you can use it to pay for goods, services or draw money and is often ‘guaranteed’ by one of the major credit card providers, such as Visa or MasterCard. The essential difference between a debit card and a credit card is that a debit card only allows you to use a specified sum available on your account – for example, the balance on your checking account. For this reason debit cards are also commonly known as ‘secured’ credit cards.
Charge Cards
Again similar to credit cards, charge cards allow you to pay for goods and services and your purchase is ‘guaranteed’ by the card issuer – for which Amex and Dinners Club are the main issuers. However, one difference between these types of consumer credit cards is that a charge card will not allow you to carry over a balance to the next statement period and you are required to repay the balance in full on each statement payment date. As such, charge cards do not charge you interest, but rather make their money charging customers a membership fee. Also, note that some charge card companies do not set limits on how much their customers’ can spend, so their use can be a little tricky to control if you are financially disciplined!
Store Cards
The final type of consumer credit is known as a store card. Store cards vary and are a hybrid between credit cards and charge cards in that some let you carry over a balance while others do not. One common factor, however, between store cards is their use is normally limited to making payments in the chain of store of the issuer. As such, they are an ideal cheap vehicle for stores to move merchandise which may not have been sold had you not used the store card.
You may freely reprint this article provided that the author bio and live links are left intact.
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