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6 Types Of Payment Cards You Should Know

payment cards

Payment cards are issued by financial institutions or banks to their customers to use as a means of transaction. The card owner can access their funds in their credit account or bank, withdraw from an ATM, or use it for electronic cash transfers for payment of goods and services. The following 6 cards are the most common types of payment cards that are used in our life.


1. Credit card


This card allows you to make transactions on a loan. The credit issuer or bank advances money to be paid to the merchants and you pay back later when you reach your credit limit. You’ll incur no interest if the bill is paid in full by the specified date. This card allows you to spend and repay later. The main types of credit cards are secured and unsecured credit cards. Secured credit cards are issued upon paying a down payment as a security. They are used if you don’t want to have an overdraft or you don’t have a credit rating. Unsecured credit cards, on the other hand, are issued without having to provide security or collateral for the credit loan. You’ll use the card for various transactions and pay upon reaching the credit limit. If you pay on time, credit cards can improve your credit score. Financial institutions can gauge if you pay your credits and if you do so in time.


2. Debit card


This payment card deducts funds directly from a consumer’s bank deposit account when they withdraw from an ATM or electronically pay for goods and services. Debit cards are issued in conjunction with a bank account. They limit the cardholder to the funds available in that account plus any overdraft, if available. They are also known as check cards or bank cards.


3. ATM card


Unlike the debit card which can be used for several transactions, an ATM card is only used to withdraw from an ATM.


4. Pre-paid card


This card is mainly issued by retail and departmental stores. Cash is loaded on the card and the cardholder can shop in the store without having to carry cash. Upon depletion of the funds, if the customer is interested, cash can be reloaded for future use. This card can also be provided pre-loaded for staff to pay expenses. This card enables businesses to manage and monitor spending. This card can be used as an alternative to business travel cards as it is available in different currencies.


5. Charge card


This card offers huge credit limits to cardholders. The card is used by businesses with huge transactions. No interest is charged and payment accrued is paid off in full at the end of each month. However, delayed payment or non-payment usually attracts huge fines. This card may also require the account holder to pay an annual fee.


6. NFC card


NFC is short for Near Field Communication. NFC card is a plastic or paper card with NFC chip embedded inside. It works together with an NFC reader and system to realize the payment purposes. NFC chip supports encryption that it’s of high-level security. It’s now being more and more popular in supermarkets and chain stores.



Payment cards are convenient to carry our day-to-day transactions as they enhance security by eliminating the need to carry huge amounts of cash. One can set the maximum limit on the card to budget how much they’ll spend on travel and shopping.


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