Which card is what
There are so many cards available on the market that it’s hard to decide which card is right for you. Here is a quick list explaining each type of cards to help you understand what an ATM card is or the difference between a debit card, credit card or charge card.
ATM Card
- Linked to your savings/cheque account.
- Convenient in that you can withdraw money anytime through either an ATM or EFTPOS facility.
- Fund limited to the amount you have in your account.
Debit Card
- Generally cardholders use these cards to access their own money via ATMs and EFTPOS terminals.
- Works off overdraft card system.
- Key difference btween ATM card and debit card is that debit cards work off the credit card system and have optional lines of credit or overdrafts attached. This way the user can access funds from their lender if their savings fall short.
Credit Card
- Can give you access to your savings/cheque account. The major difference between credit cards and ATM or debit cards is that an overdraft facility always applies.
- Depending on your income, a limit of how much you can borrow is issued on your credit card.
- Generally, there are two types of credit cards - interest-free days credit card and no interest-free days credit card.
- Interest free credit cards have a number of interest-free days - usually 55 days but can be 44 days. Suits consumers who pay the entire debt in full each month. However, unlike charge cards, you do not have to pay your balance off in full each month. If you do not pay the debt in full by the due date, you will incur interest. Usually has a higher annual fee and a higher interest rate applies.
- Credit cards with no interest-free days suit consumers who do not pay off the debt, carry a balance or wish to purchase an item such as a PC that will be paid off over time. Traditionally charge a low rate and no annual fee, but most now do charge annual fees.
Charge Cards
- Think AMEX (not its credit card) and Diners Club. Usually managed by a card issuer rather than a bank.
- Generally no pre-set spending limit. A joining fee and an annual fee but they don’t charge interest.
- Balances must be paid in full each month.
- If you fail to pay your balance in full each month, penalties as high as 3% of your balance can apply.
- No accepted as well as standard credit cards are.