Common Types of Card Services

Here's a list of the most common cards that can be used to make purchases of goods and services or get cash and a description to help you understand their differences.

[1.] Credit Card - The consumer has a line of credit from which s/he can borrow money to pay off for goods and services to a merchant. The working of this type of card is pretty straightforward: The issuer of the credit card gives you a card and you use it to pay for the items and services. Then the merchant or provider of the service collects what you owe from the card issuer.

Credit card companies make money by:
* Fees (Annual, late payment, exceeding-limit, misc)
* High interest rates
* Charging service providers a fee every time a customer uses the credit card in the provider's establishment.

[2.] Charge Cards - These provide alternative payment during purchases.
These types of cards are Travel and Entertainment cards like American Express and Diners Club cards. Usually there is no credit limit. However the issuer and the cardholder enter into an agreement that the debt must be paid in full by due date or be subject to very high late fees.

Charge card companies make money by:
* Charging high annual fees (Up to $95)
* Charging service providers a very high fee every time a customer uses the charge card in the provider's establishment.

[3.] Cash Advances - Is a service provided by most credit card and charge card issuers where cardholders are allowed to withdraw cash from a bank, or ATM, or other financial agency, up to a set limit (Credit limit for credit cards). Cash advances are more expensive than standard credit card charges. The cons of this service is that there is no grace period. Most banks charge interest from the day the cash advance is posted, even if you pay it back in full as soon as your bill comes.

Credit/Charge card companies make money by:
* Charging a transaction fee of up to 4-6% for taking a cash advance
* Higher interest rates than using normal credit cards

[4.] ATM Cards - Also called client card, key card, cash card, or bank card, are usually issued by banks for giving customers more banking hours flexibility. You can do common transactions like withdrawals, deposits, get cash advances, get account information like balance, and even make load payments. This all at any time.

[5.] Debit Cards - Most banks issue combined ATM/Debit cards that can be mistaken to look like credit cards but have different functions. They combine the functions of checks and ATM cards. That means if you pay using your debit card then money is deducted from your checking account. They can be used wherever credit cards are accepted.

The advantages of using a debit card is that you don't have to carry cash with you making it a more convenient method of paying for goods and services. No bills. Disadvantage though is that payments are immediate thus you have no right to withhold it in the event of a dispute with a merchant over your purchase. Most service providers charge a fee for using debit cards over cash. And the biggest risk is if your card is stolen, the thief can drain your account immediately, that's the reason why you should not use these cards for online transactions.