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The Different Kinds of Payment Cards

A recent report by the UK Cards Association has estimated that there are around 175m plastic payment cards in issue in the UK, broken down into four distinct types. Here we repeat the individual numbers for each type, along with a brief description.

Debit Cards

These are the most common form of plastic payment cards, with 95.7m in issue. These cards offer all the payment convenience of a standard credit card, and can be used in most shops and other outlets in the UK, as well as online. They differ from a standard credit card in that they're linked to your bank account, and if your account doesn't have sufficient funds to cover your transaction it will be declined. If the transaction is approved the money will be taken out of your account more or less immediately.

Debit cards are not usually accepted in situations where a merchant wants to 'hold' a sum of money on your card that may or may not be taken in the future - for instance, as a deposit for car hire.

Credit Cards

There are 55.4m credit cards in the UK. These cards have the widest acceptance rate and can be used wherever you can see a Visa or Mastercard, including in most cases for 'authorisation holds' (see above). When you're given your card it's supplied with a credit limit, which is the maximum balance you can build up on your account. Every month, interest is calculated on what you owe, and your statement will include a minimum payment that you have to make to keep your account in good order.

It's recommended that you try and pay off your full balance every month, as this will avoid interest charges which can otherwise build up very quickly leading to debt problems if not kept under control.

ATM Cards

Also known as 'cash cards', these are used purely for withdrawing money from your bank account at a cash machine, and as such are not strictly payment cards at all. Nonetheless, they are still fairly popular, with 18.2m active cards. Note that the vast majority of debit cards will also function as ATM cards, and while you can also withdraw money at an ATM with most credit cards, it's not recommended as the interest charged can be very high.

Charge Cards

These were the original form of plastic payment card, now declining in significance with only 6.3m cards in circulation. Depending on the brand and issuer, they can be used in all the same places as a credit card, but with the big difference that you have no option of minimum repayments - the full balance must be cleared every month. As such, there is no interest charged, and so there will either be a flat monthly or yearly fee, or more rarely a small charge for each transaction made.

There's no doubting the popularity of plastic payment options - they now account for nearly three quarters of all retail spending in the UK, with debit and credit cards alone clocking up over 500 billion pounds worth of sales in 2013.

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