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Plastic cards
                  
More and more of us are using plastic cards that aim to make our lives easier in various ways. For example, we may have a card to get money out of a cashpoint machine or to pay for things in shops and over the Internet.  Some of us may receive our benefits straight onto a card. We also use plastic cards to borrow books from the library, collect loyalty points in shops, make telephone calls, and top up gas and electricity meters.

In this section we look at the different sorts of plastic cards that we use to help us manage our money.

Cashpoint card
When you open a bank account, you should get a cashpoint card so that you can take money out of your account via a cash machine (often known as an ATM). You can’t buy anything with this card; you can only use it to get cash out of a cashpoint machine. With most bank accounts these days, cashpoint cards are combined with cheque guarantee cards and debits cards. These cards are called multifunction cards.

  • PIN numbers

    To make sure nobody else can get at your money, you need a PIN (personal identification number) when using a cashpoint card. This is a four-digit number that you key into the cashpoint machine before taking out any money. If you don’t know your PIN, you can’t get at your money. Your bank should send you the PIN and when you get it, make sure you don’t tell anyone else what the number is. Don’t even write it down somewhere. Instead, memorise it. If someone does know your number and they get hold of your card, they can use a cashpoint machine to take your money. If someone already knows your number, then change it. You can usually do this straightaway at cashpoint machines.
How To Memorise Pin Numbers - www.sharpsoftware.co.uk/pin/
This site contains a useful method for remembering your pin numbers for cash machines, credit cards and online registrations.

Cheque guarantee card
When you use cash to pay for things, it is easy to show thatyou have enough money to cover the cost of whatever it is you arebuying. With cheques it is different. If you just write a cheque to someone, they can’t tell straight away whether you actually have enough money in your bank account to pay for the goods. If you don’t have enough money in your account, the bank will usually refuse to pay and the cheque will “bounce”, which means the seller won’t get their money.

Cheque guarantee cards help solve this. They guarantee that your bank will pay the value of cheques that you write up to a certain limit. You’ll find this limit written on the back of your cheque guarantee card.

Most of the time when you pay by cheque, you will be asked to show your cheque guarantee card as well. The person taking your cheque will make sure that your signature on the cheque matches the signature on the card.

  • See our separate section on cheques for more information.

Debit card
A debit card is a plastic card that lets you spend the money in your bank account without having to carry around lots of cash. You can use debit cards over the counter, the telephone and online and you can use them all over the world.

When you use your debit card, the money you spend is taken out of your bank account immediately.

In addition to this, you can usually use a debit card as a cashpoint card and a cheque guarantee card as well so you don’t have to carry around lots of cards. You usually hear these cards referred to as multifunction cards.

Modern cards have a security number on the rear signature strip which always ends in 3 digits.

Quite often you will be asked to quote these 3 digits when you use your card on the Internet or over the telephone. This adds an additional level of security to 'card holder not present' transations.

Activity: Move your mouse pointer over the debit card (above) to find out what each area means and how it reflects you and your bank account.

Now you try. Name the features yourself. Remember you can always refresh your memory by moving over the item.

  • Chip and PIN

    When you use your debit card to pay for things over the counter, for example in shops, restaurants, hotels, stations and so on, you’ll usually be asked to put your card into a machine at the checkout and enter your PIN number. To find out more, see our section on Chip and PIN. You’ll also find a Chip and PIN simulator to help you practise paying this way. For information on keeping PIN numbers safe, see our section above.

Credit card
You can use a credit card to pay for things over the counter, online or over the phone. The big difference between debit and credit cards is that with a credit card the money you are spending doesn’t come out of your bank account. Instead, your credit card provider – which could be a bank, building society or even a high street shop – lends you the money.

You’ll get a monthly statement from your credit card provider setting out how much you’ve spent and how much more they will allow you to spend (your credit limit). You can either pay back everything your owe when you get your statement or spread the cost by paying back a bit at a time. If you choose to do this, you’ll pay interest on the money you owe, which means you’ll end up paying more for the things you bought.

  • See our section on interest to find out more about the impact of interest.

Activity: We have an activity that helps demonstrate the difference between shopping with money that you have saved up and using your credit cards. Click here to have a go.

Store cards
Some retailers operate their own credit card schemes providing cards that can usually only be used in their own outlets.

They are often marketed with a range of offers such as instant free credit or discounted purchases but they also tend to charge high interest rates.

Charge cards
Charge cards allow you to buy things on credit in the same way that credit cards do. The difference is that with a charge card, you need to pay your balance in full every month. You usually have to earn a certain amount of money before a charge card provider will consider you for a card.

Prepaid cards
You can use a prepaid cash card in the same places as a credit card. The difference is that you don’t run up a bill. Instead, you load money onto your card in much the same way that you load credits onto a prepaid mobile phone. And because you can’t spend more than you have on your card, you don’t need a bank account or to have a good credit history in order to use one. See our separate section on credit histories to find out more.

You get a PIN number just like any other cash card and you can use your card to withdraw money from cash machines too, although you will be charged for this and some other services such as using your card abroad.

If you lose your card, as long as you report it, you won’t lose your money. Instead, you’ll be issued with a new card, which will have your cash loaded onto it.

A word about loyalty cards
Lots of supermarkets and other large retailers offer loyalty cards.

These shouldn’t be confused with store cards as you can’t actually pay for goods or services with them. Instead, every time you shop, you earn points towards ‘rewards’ or special offers.

Stores benefit from these loyalty cards becuase they allow them to collect information on your personal spending habits. They use this for market research and direct marketing.

 

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