What Is a Bank Card?
A bank card is any card issued by a bank or credit union. Types of bank cards include ATM cards, debit cards, credit cards, and prepaid cards. Bank cards can be used for various purposes, including making purchases online or in person, withdrawing cash, and performing other transactions.
Key Takeaways
- Bank cards are issued by banks and credit unions. Common types include ATM cards, debit cards, credit cards, and prepaid cards.
- Many bank cards can be used for online and in-person purchases along with other kinds of spending, with the amount usually deducted directly from the account at the time of transaction.
- Most bank cards nowadays have EMV chips for security purposes, in addition to the standard magnetic stripe.
How Bank Cards Work
A bank card is typically made of plastic or metal and will feature most of the following:
- Your name
- The bank's name
- The card's name
- A unique card number
- An expiration date
- A magnetic stripe and EMV chip for purchases
- CVV number or validation code for security
- A dollar amount (certain gift cards and prepaid cards only)
Most bank cards are similar in how they're used. You can use bank cards to pay for products and services. Depending on the type of bank card you're using, the total is deducted from or charged against your existing account.
ATM cards allow you to withdraw funds from your linked account at ATMs. Depending on the issuer and the card, you may be able to make deposits, check your balance, transfer funds, and perform other transactions.
In 2021, Mastercard introduced accessible cards that allow people with vision impairment to distinguish between a prepaid card, a debit card, and a credit card. Each card type has a unique notch at the card's edge so the bank customer can choose the right card.
Types of Bank Cards
Banks may issue a variety of cards, and each one works a little differently.
Debit Cards
When you pay with a debit card, it uses the funds in your bank or credit union checking account. Your debit card can usually be used to withdraw money from your checking account at an ATM, and sometimes from the point of sale (cash register). You can also use your debit card to deposit or withdraw funds at an ATM or make balance inquiries, in combination with your PIN.
Prepaid Cards
Prepaid cards are similar in some ways to debit cards. However, prepaid cards must be loaded with money before they can be used for purchases, and that money is not necessarily linked to a bank account. But banks still manage or issue most prepaid cards in some way.
Some prepaid card accounts even offer FDIC insurance protection against bank failure, if you register your card or follow other requirements. You may also have more protection against theft, unauthorized charges, and loss if you register your card with the card provider or issuer.
Prepaid card types include gift cards, government benefit cards, payroll cards, and kids' prepaid cards.
Gift cards are the most frequently reported payment method for committing fraud, according to the Federal Trade Commission.
Credit Cards
Credit cards are a type of revolving loan account. You can spend up to a designated credit limit, and monthly payments are required to pay off the balance. The card issuer provides monthly statements detailing the card use and the required payment. Your credit card balance and payment history will usually be reported to credit reporting agencies.
In general, bank credit cards have lower interest rates compared to retail store credit cards. While you can use a credit card to withdraw money at an ATM through a cash advance, doing so will likely lead to high fees and a higher-than-usual interest rate for the amount withdrawn, so this should usually only be done as a last resort.
ATM Cards
ATM cards are more limited than the other bank card types listed above. Typically, you can only use an ATM card for transactions at an ATM, in combination with your PIN. ATM card withdrawals deduct funds from a linked bank account.
Benefits of Bank Cards
Bank cards primarily offer convenience, as they're accepted at most online and brick-and-mortar shops. Some may also come with consumer coverage for things you purchase, such as warranties or purchase protection.
Banks may offer cardholders a variety of incentives to use their bank cards. For example, a bank may offer cash-back reward programs on purchases made with bank cards associated with credit or checking accounts. Some bank cards offer special perks, such as increased rewards if you have certain account types with the issuing bank.
Bank cards may also provide many consumer liability protections you wouldn't have if using cash. For example, if someone steals your bank card and makes fraudulent purchases or transactions, you can likely recover some or all of the lost funds if you quickly report the theft.
However, almost all cards come with fees of some sort. These fees can include card replacement, account maintenance, and foreign transaction fees. Fees vary by bank and card, so ensure you shop around for the best plastic for your needs. In many cases, you can find cards that are completely free for basic needs, like everyday purchases.
All cards have unique features, fees, benefits, and drawbacks. For example, some gift cards can only be used in the U.S. Read your card or account agreement for details.
Frequently Asked Questions (FAQs)
What Are Alternatives to Bank Cards?
If you don't want to use a card connected to a bank, you may need to rely on cash or checks. However, carrying large amounts of cash around could be risky, and stashing cash in your home could lead to unrecoverable losses. Checks take much longer to process compared to plastic bank cards, so balance your checkbook regularly if you take that route.
Are There Bank Cards for Kids?
Yes, many bank cards for kids exist, including prepaid cards, ATM cards, and debit cards connected to joint checking accounts. Generally speaking, bank account-linked debit cards are only available to teens ages 13 and up. However, many of the best prepaid kids cards on the market offer apps and parental controls in conjunction with reloadable plastic.
What Are Bank Cards Made of?
Most bank cards are made of layers of water-resistant, laminated plastic. Other cards may be made of metal alone or metal mixed with plastic, typically targeting premium account holders. You can swipe and use a plastic or metal card in a similar fashion. However, destroying a metal card is more challenging when it expires. Speak to your card issuer for details on how your plastic or metal bank card works.
The Bottom Line
Bank cards offer efficient access to your funds or a revolving loan with a bank. You can use a bank card to buy goods and services, withdraw funds, and earn rewards. However, it can be easy to forget that the plastic in your pocket represents real cash. Be sure to routinely check and manage account balances connected to any bank card.
