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Once you have a bank account, you will need to start learning about the different services and products they offer. Banks have designed most of their accounts to have features that make your life that little bit more convenient.
One of the main ways in which they try to make things easier, is by offering a selection of products that can be used in shops and businesses to pay for things without having to carry a big wedge of cash around with you.
Here is a list of some of the items that you may be offered, and how they work.
Cash card –A cash card is the simplest type of card available. They can either be used at the cash machines, or ATMs (automated teller machines) of the bank or building society that you belong to, or over the counter in the branch. You can normally use your cash card in the ATM machines of other banks too, but there may be a small charge for doing so, so check to see if there are any charges if you do, before you try.
A cash card can only be used at a cash machine. You cannot use it to make purchases in shops, over the telephone or on the Internet, and should not be confused with a debit card, which can be used in this way.
Cheque-book – Depending on your age, and the type of account you have gone for, your bank may issue you with a chequebook. A cheque is a way of paying for things without having to use money. If you write a cheque in order to pay for something, it is giving your bank your written consent to take the money directly from your account, and to pass those funds into the account of the payee. You can only write a cheque if you have sufficient funds in you’re account
Cheque guarantee card - Most shops will only accept a cheque, with a cheque guarantee card. These cards will normally have a limit to the amount that you are able to spend in any transaction. This limit is printed on the card, and informs the shop that if the purchase is more than this amount, that they need to call your bank to ensure that there are sufficient funds to cover the payment.
Debit card - Again, depending on your age, your bank may choose to issue you with a debit card. This plastic card works like a cash card and a chequebook all in one. With a debit card you can withdraw money from a cash machine, just like the cash card, but you can also use it to pay for goods, by handing it over the counter of most shops, and the money will be taken automatically from your account. Switch and delta are common examples of debit cards.
Credit Card – A credit card works in a similar way to a debit card, except from instead of taking the money directly from your account, the credit card company will arrange a pre-arranged limit which you can spend up to. You will then be asked to pay a small amount at the end of the month to cover the cost of the purchases that you have made. Credit cards can charge quite high interest rates if the full balance isn’t paid off in full at the end of the month. VISA and Mastercard are common examples of credit cards.
Direct debits and standing orders - With some types of bank accounts, you may also have the ability to set up direct debits and standing orders. A direct debit is an agreement with a company you wish to purchase something from, that they can automatically take the payment from your account on a regular basis. You will agree the sum to be taken, and the day for it to be taken on, and they will arrange for the money to be collected. It is a very easy, hassle free way of paying for things on time, such as bills.
A standing order is very similar, but instead of making the arrangement with a company, you make the arrangement directly with your bank. This is again, a hassle free way of arranging payments to be made in time.
Disclaimer, Target Audience, Jurisdiction Last updated & checked: 30/03/2006