Debit Cards

• Debit cards emerged in the 1990s as a way to access bank funds without writing checks or using cash. In 1990, debit card circulation reached 19 million, and by 2006, there were an estimated 27.8 million debit cards, according to the Economy Watch website. The term "debit card" is an umbrella phrase for a type of card, which includes check cards and automated teller machine (ATM) cards.
  
  

Check Cards

• Check cards are a type of debit card that permits consumers to make a purchase by swiping the card through a processing instrument, then entering a personal identification number (PIN) or signing their name to authorize the transaction. Funds are automatically and immediately deducted from the cardholder's bank account, reducing the overall amount of available funds. If an individual attempts to make a check card purchase for an amount larger than the amount of money in her bank account, the transaction may fail and the purchase is denied. Some consumers sign up for overdraft protection, so that even if they lack sufficient funds, their bank provides money to cover the balance. This service usually carries a fee.
  
  

ATM Cards

• ATM cards are a type of debit card that allows consumers to withdraw funds from their bank account by punching in a PIN code or signing their name, depending on the location type. For example, ATMs request that consumers enter a PIN before dispensing cash. Some consumers hold debit cards that act as a combination check card and ATM card, allowing them to complete a purchase and withdraw funds from their account at the same time. This type of transaction can be authorized by entering a PIN or with a signature. For example, an individual may swipe a check card at the drugstore checkout to purchase a $10 umbrella. The processing machine prompts the consumer by asking whether he would like to withdraw additional funds. If that customer wants cash, he may punch in $20 to receive $20 in cash while an additional $10 is deducted from his bank account balance to cover the umbrella purchase.
  
  

Credit Cards

• Unlike debit cards, credit cards act as a loan from a credit card company that must be repaid with interest. When swiped through a processing machine to complete a purchase, funds aren't withdrawn from a customer's account. Instead, purchases are added together for a total debt that must be repaid on a monthly basis, in full and on time, to avoid accruing interest.