Posts Tagged ‘debit cards’

During “Confessions of a Shopaholic,” Rebecca Bloomwood (Isla Fisher) says she fell in love with shopping as a little girl, a time when she saw grown women using “magic cards” to buy things. For a long time, most people shared Rebecca’s love for the plastic money known as credit cards, but the unstable economy has made folks more cautious about what they carry in their wallets.

Before filling out an application, it is important to look at the four basic types of credit cards:

• Charge cards
• Credit cards
• Check cards
• Debit cards

Be sure to weight the pros (credits) and cons (debits) of each.

Charge Cards

A Forgotten Wallet Leads to the First Official Charge Card

Frank McNamara gets the credit for creating Diner’s Club, the first official charge card. After he forgot his wallet and was unable to pay the check at a popular New York City restaurant in 1949, McNamara came up with the charge card concept, where diners would sign for meals during the month and then settle up just one tab at the end of the month.

Although McNamara’s first card was made of cardboard, the charge card became a hit, inspiring the American Express Corporation to come up with their own charge card designed with business travelers in mind. Credit cards are still king with consumers, but the charge card continues to thrive.

• Credits: Typically, charge card issuers set no upper limit for purchases, which means no worries at the checkout line. Because the balance must be paid in full at the end of the month, you aren’t carrying a debt load from month to month. Annual fees tend to be high, especially for premium American Express cards, but these cards come with personal concierge services.
• Debits: With no ceiling on the credit limit, it is all too easy to overspend each month. Companies like AMEX also offer the option to carry a balance on many of their cards, which means paying monthly interest.

Credit Cards

From Babylon to Bank of America

Historians have said that credit was extended as far back as 3,000 years ago with the “bill of exchange” in places like Babylon and Egypt. In the 20^th century, Mr. McNamara once again gets the credit for creating one card that could be used to purchase goods and services at various businesses. Instead of maintaining credit accounts at several places, consumers needed just one or two credit cards like McNamara’s Diner’s Club.

These days, Citigroup, Bank of America and other issuers have several different credit products, some tailored to students, business travelers and those who covet frequent flyer miles. You can get a card tailored to your exact business and personal needs.

• Credits: Merchants around the world accept MasterCard and Visa, making them an invaluable credit product. Other cards, such as Citigroup’s Chairman, carry excellent concierge services and allow the cardholder access to special events.
• Debits: Until the new credit card reforms started taking effect on August 20, credit card companies had a pretty free hand with their products. If you missed making the minimum monthly payment just once, for instance, your interest rate might skyrocket. Late fees also could, in some cases, be more than your regular monthly payment. Even with the new reforms, lenders are warning that interest rates might increase to compensate for lost revenues.

Carrying a balance from month to month also increases the cost of an item purchased on credit. Banks sometimes mail out cash advance checks with a low interest rate, but if you miss a payment, that super-low interest rate goes up.

Check Cards

Cards to Access Your Bank Account

The 1990s became the decade of the debit card, which is linked to your checking and/or savings accounts. Instead of writing a check, you simply swipe the debit card, which carries the MasterCard or Visa logo, and the money is automatically drafted from your account. Debit cards also work like traditional ATM cards, allowing cash withdrawals.

• Credits: A debit card offers consumers a way to control their spending because you typically can’t charge more than your account balance. This piece of plastic carries much of the weight of a credit card without the crushing interest rates.
• Debits: Debit cards are just as vulnerable to fraud as credit cards. If thieves steal your account number, they could wipe out your entire checking account in short order. When using a debit card to secure a hotel room, the front desk will “block out” a certain amount of money in your account to cover room charges. Even if you don’t charge anything to the room, it takes several days for this hold to go away.

Debit Cards

A Reloadable Credit Card

More than ever before, consumers are having trouble getting credit cards because of their credit history. People need plastic to rent cars and make airline reservations, which makes the reloadable or prepaid card an option for those with a history of late payments or defaults. Walmart even offers incentives to consumers who cashed their paychecks at a local store and put the money on a prepaid card.

• Credits: A reloadable card is good for people who have a habit of misusing credit because you can’t spend more than the amount available on the card. To get a prepaid credit card, you simply have to open an account and deposit money into it.
• Debits: The fees required to open an account, monthly maintenance charges and the cost of reloading the card can add up quickly. Merchants such as Walmart do offer free reloads, though, if you set up a payroll direct deposit.

Do the Debits Exceed the Credits?

When weighing the pros and cons of each type of card, the biggest factor to consider is your own spending habits. If you are a careful shopper and a good saver, a credit card could be your best option. If your credit score is below 600, however, preloaded and debit cards can give you all the power of plastic.

Steven Bryan

The new Current Card from Discover is one of many financial solutions aimed at the teen and young adult market. This particular tool is a debit card that offers an unprecedented level of control for parents, while helping teenagers learn how to manage their finances before they step foot in the “real world.”

Unlike credit cards, the Current Card allows teens and parents to load it with whatever cash they feel is appropriate. Once they have put cash on the card, parents can set parental controls on how their teenagers can use the card as well as where they can use it.

Loading the Card

The Current Card from Discover is different from most teen credit cards in that the amount available to use for purchases and withdrawals is established by how much is deposited into the account. For example, if a teenager’s parents load it with $500, he or she cannot spend more than $500. In other words, it works like debit cards do when attached to savings or checking accounts.

The Current Card can be loaded for free from any bank account or credit card. It is even possible for parents to establish recurring deposits, such as $200 per month from a credit card. There are no minimum balances, loading fees or credit checks required with this card.

Free direct deposit is also available for this teen debit card if it is more appropriate. For example, teens with summer or after-school jobs can have their paychecks deposited directly into their Current Card accounts.

Setting Limits

The most unique feature of the Current Card from Discover is the ability to set myriad parental controls so parents can monitor and control their teenagers’ spending habits. The available controls include:

• Spending Limits:
  Parents can decide how much money their teenagers can spend in a given period of time. If the teen tries to exceed that limit, the card is declined.
• Shopping Categories:
  With cash or other teen credit cards, teenagers can spend their money wherever they wish. This isn’t the case with the Current Card, as parents can restrict certain shopping categories, such as tobacco or liquor stores or hotels.
• Activity Alerts:
  In addition to letting parents decide how teens will use the Current Card, this card also informs parents of purchases and withdrawals. Messages can be sent via text message or e-mail.

Other Perks

The Current Card comes with the same convenient perks you might expect to find in other teen credit cards, such as no liability for fraudulent purchases. Card holders can withdraw cash from the card at any ATM if they are unable to use the card itself, and the card also comes with exclusive discounts at many favorite teen shopping destinations.

There are seven available designs for the Current Card from Discover, which makes it particularly attractive to the younger market. Teens can not only learn to manage their finances, but do it with a sense of style.

Steve Thompson

The Pantone Fall 2009 report takes the most fashionable colors of the season and interprets them for the world of print advertising. But it’s not only fashion and graphic designers who are taking note. This season’s top credit and debit cards are stylish, fashionable and functional - we’re staying economically wise by only rating prepaid debit cards. Here’s a roundup of the top five credit (debit) card designs for fall 2009:

#5: MetroPCS Prepaid Visa Card

The MetroPCS Prepaid Visa Card is a bold, two-color card designed with purple and “burnt sienna” from this season’s Pantone report. It’s a simple, eye-catching design that can be a good match for both male and female card holders.

#4: AccountNow Prepaid MasterCard

The futuristic design of the AccountNow Prepaid MasterCard may be a good fit for the tech-savvy cardholder looking for an edgy, fashion-forward look. The color combination on this card includes “majolica blue” from the Pantone color lineup that inspires “a sense of smoky calmness.” This card has a combination of blues, grays and black that may be a good match for both male and female cardholders.

#3: Facecard Prepaid MasterCard

“Warm olive” is a popular color for fall 2009, and the Facecard Prepaid MasterCard is a single-color credit card designed in this simple, eye-catching color. The light green tone can be a good match for both male and female cardholders.

#2: BabyPhat

For cardholders interested in a celebrity-inspired design, the BabyPhat card offers plenty of style with its slinky BabyPhat feline logo and its famous BabyPhat pink hue that has been named “rapture rose” on this fall’s Pantone color report. The card will help you make a bold fashion statement during any shopping trip, and can be a stylish addition to any fashionista’s wallet.

#1: Current by Discover

Current by Discover is designed exclusively for teens and their parents, and cardholders can choose from one of seven attractive designs. Parents have the freedom of setting spending limits and restricting use in unwanted shopping categories, but teens can choose from a variety of stylish designs that best suite their personality. Design choices include a pink skull and crossbones, dance club scene, blue and white stripes, silver eagle wing or goth design, green and white skull and crossbones, a rainbow retro look and a cityscape.

Credit card companies are bringing us some fresh and stylish designs to dress up our wallets and to show off our sense of style this season. From celebrity-inspired cards to simple, sophisticated designs, cardholders of all ages can choose from a variety of fresh new styles for fall 2009.

Sabah Karimi