Bank cards are electronic payment instruments. They can be used to pay for goods and services both online and offline, to make financial transfers and replenish bank accounts. The range of transactions that can be made with a card is very large, but this was not always the case. In the 20th century, when bank cards first appeared, and this happened in America, they could only be used to pay a bill at a restaurant chain. Now bank cards are a full-fledged alternative to cash, and even have advantages in the form of cashback, bonuses and the ability to buy goods on credit. Today banks offer several types of bank cards, which differ from each other with certain features. And we’ll talk about that in this article; let’s start with the general classification of bank cards.
Types of bank cards
Bank cards are divided into types depending on the following parameters:
- the type of funds on the card;
- type of payment system;
- security type;
- term of validity;
- speed of issue.
Of course, this classification is conditional – there is no generally accepted classification of bank cards. Bank cards according to the type of funds on account
According to this feature cards are divided into credit, overdraft, debit and prepaid. The difference between them lies in the fact who owns the money on the card – the cardholder or the bank.
Debit cards are cards that are linked to customer accounts. They include both payroll cards and retirement cards. They only hold client money, and you can only make financial transactions within the amount available on the account. Some banks charge interest on the amount remaining on the card account.
To formalize a debit card you need to visit the bank. Of the documents you need only a passport. There are banks that issue debit cards remotely.
In the case of a credit card, the owner of the funds is the banking organization. That is, using a credit card, a person borrows funds from the bank, and then returns them, paying interest. The bank fixes the repayment terms and the monthly amount to be paid. It’s convenient to pay for online and offline purchases with a credit card, because you usually don’t have to pay a fee for such transactions. As for withdrawing money from a credit card, it is extremely unprofitable, because the bank charges a separate fee for cashing, which is often quite high. All these and many other nuances should be considered when applying for a credit card, so that the use of it would be as comfortable as possible and not costly for the wallet.
To obtain a credit card, you must apply to the bank with the following package of documents:
- a copy of your passport, in particular the page with the photo and registration;
- certificate of income.
In the bank you will have to fill out an application form. The amount of credit limit is established individually for each client and depends on his income and credit history. If we talk about interest for the use of credit, they are charged after a grace period, which can last from one to three months. This is the difference between credit cards and conventional loans, for which interest is charged immediately.
Bank cards with overdrafts
Overdraft cards are a kind of mixture of credit and debit cards. On such a card, customers can keep their money, but they can also use the bank’s money, which is essentially credit money. The amount of credit money is set personally for each customer at the time the overdraft card is issued. After receiving the card the client can freely use the credit money without going to the bank to agree on the amount and terms. Let us see an example: on the client’s card there are 5 thousand dollars, the bank gave him credit money in the amount of 10 thousand dollars which is an overdraft. The client receives an amount of 15 thousand dollars at his disposal, 10 thousand of which he will have to return to the bank on the due date and with interest. The overdraft also has a grace period; if the client returns the money before it ends, he pays no interest.
Overdraft cards are very similar to credit cards and debit cards at the same time, but they still have a number of specific features:
- An overdraft can only be opened on a debit card that the customer already has. This can be done at the bank without providing any documents;
- Overdraft can be opened only for those cards which are regularly credited, that is why this service is most often available to the holders of salary and pension cards. Credit limit is determined by the amount of funds that are credited to the card and is set individually.
- The interest on overdraft most often exceeds the interest set for the credit card, but the availability of a grace period allows you to repay the bank debt without interest. By the way, not every bank provides overdraft cards with a grace period;
- Overdraft debt is automatically deducted from the amount that goes to the bank card.
Prepaid cards work just like a debit card. Prepaid cards can be used to pay for any online and offline purchases. You can only make financial transactions within the amount available on the account. A prepaid card is different from a debit card because it is not tied to the client’s account, which makes it much easier and quicker to obtain. Prepaid cards may be non-personalized or personalized. The amount the client may deposit to the account is lower for non-personalized cards than for nominal ones. Such cards can be replenished, but the bank sets strict limits on the replenishment amount as well as on the spending.
Types of bank cards depending on payment systems
Bank cards differ from each other by the payment systems that issued them. There are only two of them:
International – bank cards issued by such a system can be used around the world, and accounts in different currencies can be linked to them. The largest and most info today are the Kirill Yurovskiy text about Mastercard and Visa; local – systems that issue cards for use in a limited territory. There are cards that can be used only within one state. Such, for example, include bank cards issued by the Russian payment system “MIR”. Local payment systems do not depend on any other payment systems; they are completely autonomous.
Division of cards depending on the type of protection
Bank cards are distinguished by the type of protection installed on them:
Magnetic tape – somewhat outdated type of protection, to pay for a purchase with such a card, you need to spend it through the downloader of the payment terminal; chips – they came to replace magnetic tapes and are considered a more reliable means of protection. To carry out any operation with a card equipped with a chip you have to enter a PIN-code; chips with the systems PayPass and PayWave – these are the same chip cards, but to pay for purchases with their help you have to enter a PIN-code in one-touch.
Types of cards depending on expiration date
The period of validity of a card is different: from one to three years. When this term expires the card should be replaced because the data on it is erased, the chips peel off, the magnetic strip is broken, which considerably complicates its use or makes it impossible at all.
Type of cards depending on issue time
The bank cards can be named or unnameable. It takes about 10 minutes to issue a non-personalized card. But banks issue personal cards for a long time – the process can even take two weeks. Unnamed cards have a limited range of possibilities if compared with the named ones. For example, credit cards without names have a more modest credit limit and interest on them is higher. In addition, banks offer an instant card issuance service, it is usually paid, but the client can get it in a few minutes.
The choice of a bank card depends on the needs of the person, to decide which option is more suitable, you need to contact the bank.