 TITLE: Information on Credit Cards, Debit Cards, MasterCard, Visa CONTENT: Everything You Need to Know About Credit Cards\n----------------------------------------------\n###### Written by: Kristy Welsh\n_Last Updated: July 26, 2017_\nThere are so many credit card products available today — it can be overwhelming and confusing. Everyone at some point in their lives has received a credit card offer in the mail, but how do you know if that is a good credit card for you?  And, with all of the cards now available, what types of cards are the best deals today? We have tried to compile as much free credit card information as possible and listed the most frequently asked questions below. With information always changing, we try to keep this page updated but it can be challenging at times. Always do you own due diligence before filling out the next credit card application to make sure you are getting the best deal for your situation.\nWhat Types of Cards Are Available?\n----------------------------------\n*   **Credit Cards:** The credit card issuer gives you a card. You use the card to pay for items and services up to a certain total amount — your credit limit. The store merchant or service provider collects what you owe from the card issuer, whom you repay.\n*   **Charge Cards:** These are also called travel and entertainment cards and are a little different from credit cards. Charge cards, such as American Express and Diners Club, have no credit limit. You can usually charge as much as you want, but are required to pay off your entire balance when your bill arrives.\n*   **ATM Cards:** ATM cards are issued by banks, essentially to give bank customers flexibility in their banking hours. In most areas, you can use an ATM card to withdraw money, make deposits, transfer money between accounts, find out your balance, get a cash advance, and even make loan payments at all hours of the day or night.\n*   **Debit Cards:** Debit cards combine the functions of ATM cards and checks. When you pay with a debit card, the money is automatically deducted from your checking account.\nIs a MasterCard Better Than a VISA? What About American Express or Diners Club?\n-------------------------------------------------------------------------------\nMasterCard and VISA don't actually issue cards — they are just the payment network that transactions are processed over. In the U.S., almost any establishment that takes MasterCard takes VISA, and vice versa.\nAccording to WalletHub, at the end of 2016, VISA had 335 million cards (52.8%) in circulation. Compared to MasterCard with 200 million (31.6%), American Express with 47.5 million (7.5%) cards, and Discover with 51.4 million (8.1%) cards in circulation.  \nAmerican Express, Diners Club, and their kin were originally aimed at the more upscale \"travel and entertainment\" market. They are accepted at many places, though not as many as VISA and MC. Some places don't take MC and VISA but do take American Express or Diners Club.\nAmerican Express used to be very handy for traveling in Europe. Among other things, it would let you cash personal checks drawn on your U.S. bank at any of their many offices. Nowadays, however, with your VISA or MasterCard, you can get cash advances at local banks at a better exchange rate.\nThe best card for you is the one that is accepted where you shop and charges you the least amount of money for the services you actually use. For example, if you always pay off your balance each month, it is important to get a card with a grace period; the interest rate doesn't matter much.\nWhy Do MasterCard\/VISA Cards Have Different Rates and Fees?\n-----------------------------------------------------------\nMasterCard and VISA rates are set independently by the banks issuing them. In fact, a given bank may offer several different rate and fee schedules. Sometimes you can pick which one you want; other times the bank will offer you a single set of terms with no option, even though it offers another customer a different set of terms. That's why it's worth shopping around rather than just applying for \"a MasterCard\" or \"a VISA.\" \nWhat is a Secured Card?\n-----------------------\nSecured cards require you to make a bank deposit up front. The limit on the card is usually related to the amount of the bank deposit. The bank has the right to take money from your deposit if you don't pay your bill.\nSecured cards are usually approved for people who have credit problems and can't get an unsecured card. A secured card from a bank is a great way for someone to rebuild their credit and eventually, the issuing bank may switch the card to an unsecured card if the customer pays their balance on time and proves they are now a more favorable credit risk.\nA secured MasterCard or VISA looks just like a regular credit card and the law ensures that it has all the same consumer protections.\nYou can see a list of secured cards we recommend.\nWhat is an Unsecured Card?\n--------------------------\nYou probably won't hear this term often because it is the norm. A \"regular\" credit card is and unsecured card. Unsecured simply means the bank can't take specific assets of yours in the event that you don't pay your bill, but rather would have to sue you or force you into bankruptcy to collect.\nWhat is a Debit Card?\n---------------------\nAs its name implies, it is not a credit card. Instead of running up a bill that you pay at the end of the month, the debit card runs down your checking account at the moment the sale is made. Merchants like these because they get instant payment without worrying about bad checks.\nDebit cards are convenient but they do have drawbacks. It is a lot more painful to resolve a problem with a purchase if the money is gone from your account (as with a debit card) than if it's just numbers on a piece of paper (as with a credit card). And if you lose a debit card, your whole account can be emptied with no recourse for you. You decide whether you want to take that risk.\nConsumers in the know don't like debit cards because they offer less protection than credit cards in the event of a billing dispute. See our document on billing errors and overcharges.\nHow Does an ATM Card Differ From a Debit Card?\n----------------------------------------------\nAn ATM (automatic teller machine) card is a form of debit card but you use it in a cash machine by punching in your code number. A debit card looks very much like a credit card and is treated like a credit card by most merchants but the purchase is immediately deducted from your checking account. An ATM card looks nothing like a credit card, has no Visa or MC logos on it, and is only good for making cash withdrawals from your checking account at cash machines.\nThe ATM card is a little less dangerous if you lose it, since nobody can use it to drain your account without knowing your PIN (personal identification number). Also, most banks limit the amount of cash that can be withdrawn with an ATM card in a day. A VISA or MasterCard debit card allows a thief clean out your entire account with one purchase.\nWhat is a PIN?\n--------------\nA PIN is a password that goes with your card and allows you to make certain types of electronic transactions involving your card. In some countries, most credit card purchases are validated with a PIN. Although you can still use your card without one, they may sometimes have to phone for authorization. Also, if you have a PIN, you can get cash advances from many cash machines. Note however that it is best to get a 4-digit PIN; longer PINs are not accepted by some networks.\nAlso, protect your PIN as if it were cash. Do NOT write it down anywhere near your card. With this number, and your card, a thief could run your card to its maximum in cash advances.\nSome Common Credit Card Terms\n-----------------------------\n**Annual Fee**  \nA flat, yearly charge similar to a membership fee\n**Annual Percentage Rate (APR)**  \nA measure of the cost of credit that expresses the finance charge, which includes interest and may also include other charges, as a yearly rate.\n**Finance Charge**  \nThe dollar amount you pay to use credit. Besides interest costs, it may include other charges associated with transactions such as cash advance fees.\n**Grace Period**  \nA time, about 25 days, during which you can pay your credit card bill without paying a finance charge. Under almost all credit card plans, the grace period **only** applies if you pay your balance in full each month. It does not apply if you carry a balance forward. Also, the grace period does not apply to cash advances.\n**Interest Rate**  \nInterest rates on credit card plans change over time. Some are explicitly tied to changes in other interest rates such as the prime rate or the Treasury Bill rate and are called **variable rate** plans. Others are not explicitly tied to changes in other interest rates and are called **fixed rate** plans.\nHow Do Credit Card Companies Calculate Credit Card Interest Each Month?\n-----------------------------------------------------------------------\nTo calculate the interest on your card each month, the lender multiplies the card's interest rate (the APR) times your card balance. This will give the interest for the entire year. The lender will divide this interest calculated by the number of months in the year, or 12. The sticky part is calculating the credit card balance. This is why it's important to choose a card with a grace period (see last question). If you do have a balance on your card, there are three methods of calculating it:\n**Average Daily Balance**  \nWith average daily balance (the most common method), the issuer calculates the balance by taking the amount of debt you had in your account each day during the period covered by the billing statement and averaging it.\n**Previous Balance**  \nWith this method, the issuer uses the balance outstanding at the end of the previous period-- that is, the period prior to the one covered by the current billing statement.\n**Adjusted Balance Method**  \nWith this method, the balance is derived by subtracting the payments you've made from the previous balance. END