Which Credit Card?
By John Mussi
Bewildered by the sheer variety of debit cards and credit cards? Here is a
breakdown of some of the main types of debit and credit cards available:
You can use a debit card to buy goods and services. A debit card is very
much like a cheque, unlike a credit card, you pay for goods straight away
and the money comes out of your account quickly. The amount you spend using
a debit card is immediately deducted from your current account.
A debit card allows you to make purchases whereby the
money is taken straight from your current account, the benefit of a debit
card is that your finances are kept up to date immediately, without having
to wait for a monthly bill as is the case with a credit card.
Your banking institution issues you with a debit card. Debit cards offer
less protection than credit cards in the event of a billing dispute. In
addition, if your debit card is stolen, it is possible that your debit card
account could be emptied. Most debit cards have a Switch/Delta/Solo/Electron
symbol on them. If you become overdrawn you will pay interest on the amount
This lets you take out money from a cash machine (ATM). To use it, you'll
need a Personal Identification Number (or PIN) which your bank sends you.
Each time you use your card at a cash machine, you'll need to key in this
A credit card lets you buy goods and services up to a set limit before you
pay for them. A credit card represents a loan agreement where you are
offered credit, providing you pay off a minimum amount each month. You can
charge purchases up to the amount of your credit limit and pay for them
If you clear your balance in full each month, you don't pay any interest on
the money you have spent. But, if you don't, you'll normally have to pay at
least 3-5% of the balance, and interest will be charged on the outstanding
balance. Some cards charge you an annual fee.
A credit card allows you to live now and pay later. When you successfully
apply for a credit card, you will be advised of your credit limit. Ensure
you stay within it, as exceeding it could result in either your card taken
away from you or being charged interest on the extra credit you incur.
This is very similar to a credit card, although the monthly balance must be
paid in full. An example of a type of charge card would be an "American
Cheque guarantee card
If you're paying for goods or services with a cheque, you'll probably be
asked for a cheque guarantee card. This means the bank will normally pay
your cheque up to the amount guaranteed.
A restricted form of credit, store cards act as credit cards in those shops
that the card is accepted. Purchases are made using the card, and then a
consolidated bill is sent at the month's end, which is then settled in a
manner similar to a credit card.
Deciding which plastic card to use can be confusing but it can help you to
reach a decision if you know what you want to use the card for.
If you just need it as a substitute for carrying cash, rather than use a
credit card, you may as well use a debit card, which takes the money from
your bank account directly.
If you like to pay your balance off each month, a charge card might suit
If you want to pay off your debt in instalments, choose a credit card.
You may freely reprint this article provided the author's biography remains
About The Author
John Mussi is the founder of Direct Online Loans who help UK homeowners find
the best available loans via the http://www.directonlineloans.co.uk website.
Article Source: http://EzineArticles.com/