What is a check card?
A check card functions similarly to a debit card, with many retailers treating them as the same thing. Early check cards were the precursors to the debit card, with a check card acting as an identification card that allowed its users to tender payment for goods or services with a check.
The way a check card functions depends primarily on the type of card it is. For the most part, non-credit card check cards give access to funds stored in a bank checking account or, in the case of a prepaid debit card, money stored in a refillable account.
Most check cards feature a magnetic strip along the bottom of the back of the card, containing the cardholder’s personal information, including the checking account number, name and information pertinent to the use of the card.
To access the funds, you must enter a personal identification number (PIN). In addition to a PIN, newer cards use chips that generate a unique one-time code every time you use the card. This cuts down on fraud and identity theft.
The user of the check card can only access the funds available in the account or on the card when using a debit card or automatic teller machine (ATM) card. Check cards that function as credit cards generally have a limit to how much you can spend. Debit cards also can function as a credit card of sorts, requiring you to sign for transactions, though you still can only access the funds in your checking account.
Below are the types of check cards and how they work:
Credit card — Using a credit card functions similarly to taking out a loan. Most cards allow you to avoid any interest on the amount you spend, if you pay the amount back before the end of the month. Miss this deadline, and you could pay up to 29 percent interest annually on any money you borrow, depending on the card and terms.
Debit card — A debit card connects directly to your checking account, allowing you to buy items and pay for them, without having to write a check. You must be careful that you keep track of the amount in your account. Once you empty the account, the card no longer works and can cause you to accrue an overdraft fee.
Prepaid debit card — A prepaid debit card acts like a debit card but requires you to fill the account with money to use it. A prepaid debit card carries many advantages. The biggest is the security it offers over a regular debit card.
ATM card — An ATM card only allows you to withdraw money from an ATM and doesn’t allow you to use it for payment purposes. The VISA or Mastercard name on the card represents the easiest way to tell the difference between a debit and ATM card. ATM cards don’t contain this designation.
Check card example
It’s a Friday night and Tom is going out to dinner with a group of friends. But he doesn’t have enough cash in his wallet to pay for his portion the restaurant check. So, Tom stops off at an ATM machine to withdrawal some money, using his ATM card.
Want to know more about how your debit card works? This Bankrate story will help.