How to choose your bank card?

Today I'm talking to you about a subject that many of us don't understand very well. This is the bank card. In fact, bank cards are usually associated with a bank account and allow us to make cash withdrawals from ATMs. The purpose of these cards is nothing more than to provide an additional service.

These cards offer us convenience, security and speed in managing our money. They also allow us to make purchases in a store or on the internet. In this article, I present to you the different types of bank cards so you can choose the one that suits you.

Let's start by defining the concepts, as we always do. But before you start, here is a training that allows you to earn 1000euros/Day on 5euros.com. Click here to buy it

🥀 What is a bank card 

A Bank card is a means of payment issued by a bank or financial institution. It is linked to a bank account and allows its holder to carry out financial transactions, such as in-store purchases, cash withdrawals from automatic teller machines (ATMs) or online payments.

A bank card can take different forms, including a debit card or credit card. A debit card is directly linked to the balance available in the holder's bank account. When the card is used, the transaction amount is immediately deducted from the account balance.

On the other hand, a credit card allows its holder to'borrow moneyt from the bank or card issuer. Spending on a credit card is added to a balance that must be repaid later, usually with interest if the balance is not paid off in full each month.

Bank cards generally have a microchip and a magnetic strip to facilitate transactions. They may also be equipped with additional features, such as rewards programs, insurance or contactless payment options.

🥀 History of credit cards

It all started in 1914 with Western Union, which had created a card for its VIP customers. This card offered them preferential treatment and the possibility of accessing credits at no cost. This was the arrival of bank cards. From there, many other companies started issuing their own cards.

At the time, bank cards were intended for the exclusive use of the establishment that issued them, to build customer loyalty. These cards were also intended to provide VIP treatment and credit that facilitated purchases within the business itself.

Although, like many great inventions, it was born by chance, the invention of this first card would spread like foam. the Diners Club was the first credit card, which made it possible to pay in several restaurants which had joined forces to allow deferred payment.

As it expanded, financial entities across the United States began issuing cards. Each time, the cards made it possible to pay in more places.

In 1958, American Express and Bank of America, were going to join the boom of these cards which made it possible to defer purchases for the payment of a small interest.

MasterCard was born at the end of the 60s, making the jump to Europe. VISA, for its part, was born in 1977 from the union of several banks, led by Bank of America.

🥀 The different types of credit card

There are several types of bank cards, each with its own characteristics. In this article, I have taken the trouble to highlight for you the characteristics of each type of bank card in order to allow you to easily make your choice.

These features will also allow you to reduce or even avoid certain bank charges. I recommend you check out my guide on how to avoid high bank charges.

✔️ Debit cards

The first type of bank card on our list is the debit card. It is a type of card that can only have the money it has in the associated bank account. That is, although you can withdraw money from ATMs and pay in stores, the limit is in your account balance.

This type of card is one of the most common. It can be used to withdraw cash from ATMs, pay bills in stores where it is accepted. This card also allows you to make transfers and other transactions such as checking account balances, etc.

She generally has a daily limit maximum cash withdrawal. You must consult your bank to find out this limit.

➤ Debit card features

The debit card has several distinctive features that make it a popular and convenient payment method. Here are some of its main features:

Direct access to the bank account: A debit card is directly linked to the holder's bank account. When used to make a purchase or withdraw money, the corresponding amount is immediately deducted from the available balance in the account.

Versatile use: Debit cards can be used in a variety of situations. They can be used to make purchases in store, online or by telephone, as well as to withdraw money from automatic teller machines (ATMs).

Security: Debit cards are usually equipped with a microchip and a PIN (Personal Identification Number) to ensure transaction security. The cardholder must enter the PIN when making a transaction, which adds an extra layer of security.

No borrowing money: Unlike credit cards, debit cards do not allow you to borrow money. Expenditures made with a debit card are directly deducted from the balance available in the holder's bank account.

Expense tracking: Transactions made with a debit card are typically recorded on the holder's bank account statement, making it easier to track expenses and manage personal finances.

No interest charges: Since debit cards don't allow you to borrow money, they generally don't incur interest charges. However, some banks may charge usage fees or fees for certain specific transactions.

It is important to note that the specific features of a debit card may vary depending on the issuing bank and the country where it is used. It is recommended to consult the bank's terms and policies for detailed information on specific debit card features.

✔️ Credit cards

Credit cards are a form of short-term financing for bank customers. This means you can make a purchase when you don't have enough money in your account.

The main difference with debit card is that credit card is associated with a loan. That is, if we have a credit card with a credit of €5, even if we do not have money in our bank account, we can withdraw from ATMs or pay in store up to € 5.

Remember that using a credit card has the same consequences as any other method of credit. In other words, you are obliged to return the money and pay the interest incurred.

➤ Credit card features

The credit card has several distinctive features that make it a popular and versatile payment method. Here are some of its main features:

Borrowing money: Unlike a debit card, a credit card allows its holder to borrow money from the issuing bank or financial institution. Spends made with the card are added to a balance that must be repaid later.

Grace period : Credit cards usually offer a grace period during which no interest is charged on expenses made. This period generally varies between 21 and 30 days from the date of the transaction. If the balance is repaid in full before the end of the grace period, no interest is charged.

Interest charges: If the credit card balance is not repaid in full before the end of the grace period, interest charges will be applied on the remaining balance. Credit card interest rates can vary widely, so it's important to check the specific terms with the card issuer.

Payment flexibility: Credit cards offer flexibility in terms of payment. Cardholders can choose to repay the full amount spent each month or make minimum payments, which usually include interest. However, it is recommended to pay off the balance in full each month to avoid high interest charges.

Rewards and benefits: Many credit cards offer rewards programs, such as points, cash back or airline miles, that allow cardholders to receive additional benefits when using their card to make purchases.

Consumer Protection: Credit cards often offer increased protection for consumers in the event of fraud or a dispute with a merchant. They may also offer additional insurance, such as travel insurance or purchase protection.

✔️ Renewable or deferred payment cards

These are credit cards in which the flexible payment method has been chosen. They allow you to return deferred credit by paying periodic installments that vary according to the amounts arranged.

Within the limits set by your bank, you can set the amount of the deposit. But, be aware that with each payment paid, the credit available on the card is replenished. In other words, you can find the amount of capital that you amortize on each share. What are the particularities of deferred payment cards?

➤ The characteristics of deferred payment cards

Deferred payment cards, also known as deferred payment credit cards, have some specific features. Here are some of their main features:

Payment deferral: Deferred payment cards allow cardholders to defer paying the card balance in full until a later date, usually at the end of the following month. This means that expenses made with the card do not have to be reimbursed immediately.

Grace period : Deferred payment cards typically offer a grace period during which no interest is charged on any expenses made. This period generally varies between 21 and 30 days from the date of the transaction. If the balance is repaid in full before the end of the grace period, no interest is charged.

Interest charges: If the card balance is not repaid in full before the end of the grace period, interest charges will be applied on the remaining balance. Interest rates for deferred payment cards can vary, so it's important to check the specific terms with the card issuer.

Payment flexibility: Deferred payment cardholders have the option to repay the full amount spent each month or make minimum payments. However, it is recommended to pay off the balance in full each month to avoid high interest charges.

Versatile use: Deferred payment cards can be used in a variety of situations, whether for in-store, online or telephone purchases, as well as for cash withdrawals from automated teller machines (ATMs).

Rewards and benefits: Some deferred payment cards offer rewards programs similar to traditional credit cards, such as points, cash back, or special benefits associated with using the card.

✔️ Prepaid cards or wallets

Prepaid cards allow you to make payments. These cards are not associated with a bank account. They are generally used to make small payments and have the advantage of being able to recharge it whenever we want.

As a result, if the card is stolen, your maximum loss will be the balance on the card at that time. Prepaid cards are more similar to debit cards since the customer can only have the exact balance on the card.

➤ Features of prepaid cards

Prepaid cards have some specific features that set them apart from other types of payment cards. Here are some of their main features:

Pre-loading: Prepaid cards must be loaded with a specific amount before they can be used. This means that the cardholder must deposit funds into the card before they can make purchases or payments.

Use limited to available balance: Spending with a prepaid card is limited to the amount previously loaded onto the card. Once the available balance is exhausted, the card cannot be used unless reloaded.

No link with a bank account: Unlike debit or credit cards, prepaid cards are not tied to a specific bank account. They operate autonomously and have no impact on the holder's personal finances beyond the amount loaded on the card.

Anonymity: Prepaid cards often offer a certain degree of anonymity because they are not directly linked to the identity of the cardholder. This can be beneficial for those who wish to maintain their privacy during financial transactions.

Versatile use: Prepaid cards can generally be used in the same situations as other payment cards, whether for in-store, online or telephone purchases. They can also be used to withdraw money from automatic teller machines (ATMs).

No interest or overdraft fees: Since prepaid cards work with the preloaded amount, there are no interest charges associated with their use. Additionally, it is not possible to spend more than the available balance, which eliminates the risk of discovered.

It is important to note that the specific features of a prepaid card may vary depending on the issuer and the terms associated with the card.

✔️ Multi-currency cards

This type of card is not as popular as the previous ones, but it allows you to top up your card in one currency and make payments in three or four different currencies.

For example, if I load my card with Mexican Pesos, this card will allow me to make payments not only in Pesos, but also in US dollars, euros and pounds, for example.

This card works like a prepaid card, where the money is deposited before any payment transactions. An advantage of this card is that the costs of converting from one currency to another are avoided when traveling.

✔️ virtual cards

Virtual cards are payment cards that exist only in electronic form, without physical support. They have certain specific characteristics:

Online use: Virtual cards are primarily designed for online purchases. They are usually associated with a card number, expiration date and security code (CVV), which can be used during the payment process on websites.

Enhanced security: Virtual cards provide an extra level of security for online transactions. Since they are not physical, they are less likely to be lost or stolen. Additionally, some virtual cards are single-use, meaning they can only be used once for a specific transaction, increasing security.

Expense control: Virtual cards allow users to set specific spending limits for a specific period of time. This can be useful for controlling online spending and avoiding impulse purchases.

Potential anonymity: In some cases, virtual cards can provide a degree of anonymity when shopping online. Because they are not directly linked to the identity of the holder, it may be more difficult to trace transactions back to a specific person.

Ease of creation and use: Virtual cards can often be created quickly and easily online, without the need to physically visit a bank or financial institution. Additionally, they can be used instantly after creation.

Usage Limitations : Virtual cards may have certain usage limitations. For example, they may not be accepted in all online stores or may not be usable for certain types of transactions, such as cash withdrawals from automated teller machines (ATMs).

🥀 Summary…

In conclusion, choose your bank card is an important decision that depends on many personal factors. It is essential to consider your specific needs, lifestyle and financial preferences when selecting a credit card.

The article explored different categories of bank cards, including credit cards, deferred payment cards, prepaid cards and virtual cards. Each of these cards has unique features that can meet specific needs.

When choosing a credit card, it's important to consider things like associated fees, benefits and rewards offered, interest rates, payment flexibility, and security. It is also recommended to compare offers from different financial institutions to find the card that best suits your needs.

Ultimately, there is no universal bank card that fits everyone. This is a personal decision that requires careful reflection. By understanding the features and options available, it is possible to choose a bank card that facilitates daily financial management and offers benefits adapted to your lifestyle.

Whether to manage your spending, benefit from rewards or ensure secure online use, choosing the right bank card can contribute to a more pleasant and efficient financial experience.

FAQ – How to choose your bank card?

Q: What are the different categories of bank cards?
A: The main categories of bank cards are credit cards, deferred payment cards, prepaid cards and virtual cards.

Q: What factors should you consider when choosing a credit card?
A: It is important to consider your specific needs, lifestyle and financial preferences when choosing a credit card. It is also recommended to consider things like associated fees, benefits and rewards offered, interest rates, payment flexibility, and security.

Q: How do I choose between a credit card and a deferred payment card?
A: Credit cards allow you to borrow money from the bank to make purchases. Deferred payment cards allow you to postpone paying the balance in full until a later date. The choice will depend on the ability to repay the balance each month or prefer a payment deferral.

Q: What are the advantages of prepaid cards?
A: Prepaid cards offer spending control, an added level of security and some degree of potential anonymity.

Q: Why use a virtual card?
A: Virtual cards provide an extra level of security for online transactions and can be created quickly and easily online.

Q: How do I choose the best credit card for me?
A: There is no universal bank card that fits everyone. It is important to consider your specific needs and compare offers from different financial institutions to find the card that best suits your needs.