I Have Plenty Of Cards From Banks

Here is where things get a little crazy.

Credit cards versus debit cards. Both of these can issued by banks. Just because something LOOKS like a credit card no longer means it IS a credit card. By definition a credit card works on credit. The issuer pays for the things you charge on your promise to pay them back later. If you card deducts from a deposit amount or bank account, you do NOT have a credit card. This is a debit card.

ATM Cards. Long ago, ATM cards were all the rage. With these cards you could get money out of an ATM and that was it.

Debit Cards. Not long after that people wanted to the convenient ATM cards at other places. You could go to a store and have the money electronically debited from your bank account. At the store you would swipe your debit card at a POINT OF SALE (POS) terminal and enter your PIN to complete the transaction. You can think of this like an electronic check. This was the standard for a long time until…

Check Cards came along and made things more confusing. Your Check Card is an ATM card. It is also a debit card which works like a an electronic check with your PIN. Additionally it works like a credit card (press credit instead of debit). Anywhere the credit network you have is accepted so is your check card. By selecting the credit option you may not be charged the debit fees that used to be associated with debit cards, and you do not have to enter your PIN. Voila! Your purchase is paid for through the credit network, but it is not credit since the money is removed directly from your account. Hence the name check card.

Check cards do not build credit. You can have as many as you want from all the banks in the world, but you will not build credit at all. They are equally convenient, but you will not build credit at all.

In fact, in a future article, we will discuss how check cards are more DANGEROUS than credit cards.

To make things confusing, some banks that issue Check cards also issue Credit cards. Think of the major banks like Citi and Bank of America. Again note, that if your card takes money from an account immediately when you spend, this is not a credit card.