Debit and cash cards

Not all cards work on a purchase now, pay later basis, so it's best to understand how yours works before you start punching in that PIN.

Card basics

• We're talking about a playing-card-sized wafer of plastic that allows you to draw money from an account in a variety of ways.
• Different accounts offer different cards. As a rule, at 16 you can open a basic account that comes with a cash card, and then a current account at 18 that offers debit, cheque guarantee cards and combined cards.
• Each card comes with a unique, four digit Personal Identification Number (PIN) that allows you to use the card. For security reasons, this should be known by nobody else but you. You can also change it to a number you find easy to remember.

How they work           

• A cash card allows you to draw money from Automated Teller Machines (ATMs or cash machines). Many banks set a daily limit as to how much you can take out, even if your account contains funds.  A cash card is often issued as part of a basic account package. The minimum age to open an account like this is 16.
• A debit card allows you to pay for goods at the point of purchase, providing there's money in your current account. Some shops may also provide 'cashback' when making your purchase (which means they debit more than the cost of the goods, and hand you the difference in cash). Generally you must be 18 before a bank will issue a debit card as part of a current account package.  You can also pay regular household and personal bills with your debit card by setting up a direct debit. This means that the money you owe is taken out of your bank account on a certain date to pay a bill. A lot of companies offer a discount if you pay through direct debit. BACS (the industry body behind direct debit in the UK) says that individuals can save up to £100 a year paying this way.
• The pre-paid debit card. A new and controversial concept in banking for young people. The pre-paid debit card operates much like a pre-paid phone card, allowing users (or their parents) to 'top up' the card with cash from another account. Users as young as 13 are the focus for many pre-paid card providers, which has attracted criticism for the suggestion that it will encourage credit card style spending instead of saving. There is no overdraft facility, but charges are made for the card and some of its uses (such as withdrawing money from an ATM).
• A cheque guarantee card is used to back up any cheque you write - usually up to the value of £50-£100, but some cards may go higher. You must be 18 or above before your bank will issue a cheque guarantee card and chequebook as part of a current account package.
• A combined card. This is a cash, debit and cheque guarantee card rolled into one - available to account-holders aged 18 or over.

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