Bank card

What is a bank card?

A bank card is a payment card issued by a bank. Bank cards let customers access funds in checking or savings accounts or make purchases against a line of credit. ATM cards, debit cards, and credit cards are all considered types of bank card.

Deeper definition

Rectangular bank cards with unique serial numbers were first issued by Flatbush National Bank in Brooklyn in 1946, followed by New York’s Franklin National Bank in 1951. These early bank cards were limited to purchases at a short list of local retailers. The Diner’s Club card was created in 1950 for a select group of high-end restaurants, inspiring American Express to launch a similar payment card for business travel expenses.

These early payment cards were made of cardboard, but by the early 1960s bank and charge cards were made of plastic, with raised serial numbers that facilitated the use of carbon copy forms for registering payments. In the 1970s, magnetic strip technology was added to bank cards, and today nearly all bank cards are smart cards that include microchips and data storage to authenticate users and transactions.

Bank cards usually carry the logo of the company that processes the payment, such as Visa or Mastercard. ATM cards that are not debit cards or credits cards do not carry the such a logo, because customers cannot use them for purchases. Additionally, banks may sometimes partner with other organizations to release co-branded and affinity cards, which bear a logo or a related image of the partner brand.

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Bank card example

There are four categories of bank card:

• ATM cards: These cards allow the customer to withdraw, deposit, or transfer money from any automatic teller machines. In addition, ATM cards let a customer get a cash advance, check her account balance, and make a loan payment.
• Debit cards: Also called check cards, debit cards combine the functionality of an ATM card and a check, debit cards let the account holder make purchases at retailers and also work as ATM cards. When used as a check, the funds automatically come out of the respective account.
• Prepaid debit card: A prepaid debit card carries a set amount of money and only allows the card holder to spend the balance on the card. Once the money runs out, the customer must refill the card.
• Credit cards: A form of revolving loan, credit cards let the customer make purchases against a line of credit. If the balance is paid off before the end of the month, no interest is charged on the loan. Balances held longer than one month incur interest charges.