A guide to different card types

These days, it's not uncommon to find your wallet filled with everything except cash. There are numerous cards you can use to make payments.

So how many different types of cards are there? Read on to learn about the different types of cards, how they work, and important things to consider.

What are the traditional card types?

When you think about payment cards, you probably imagine credit and debit cards. These cards are the foundation for everyday transactions, ranging from online shopping to withdrawing money from an ATM.

Banks and other financial institutions work with credit card networks to offer different types of cards to their members. The card networks are responsible for transferring money from the consumer to the merchant, while the bank (known as the credit card issuer) is responsible for managing the account.

Different debit cards

Debit cards connect to a specific account from your card issuer, allowing you to draw money directly from your available funds in the account. You need to have money in your account to use a debit card and can typically only spend as much as what is available.

There are also prepaid debit cards that are loaded with a specific dollar amount and only allow the user to spend what is on the card.

Different credit cards

There are many types of credit cards, including cards issued by banks or credit networks and co-branded cards offered by retailers or other businesses.

Credit cards allow shoppers to spend money and pay it back later. Some credit cards also allow shoppers to access special promotions like rewards and lower interest rates, though they may require an annual fee.

If you don’t pay the balance when it’s due, you may be subjected to various interest charges and fees. Always read the terms and conditions and understand the risks before deciding to apply for or using a credit card.

Different charge cards

A charge card works the same way as a credit card but with one important difference: the entire balance must be paid off in full each month. If the balance is not paid off in full each month, late fees and other penalties may apply depending on the card issuer. Like credit cards, charge cards are offered by banks, credit networks, or other businesses.

Other cards

Though traditional cards remain popular, there are also types of payment cards that aren't physical. For instance, these four types of cards exist electronically:

• Virtual cards. Virtual cards are like credit cards or debit cards, with a unique card number, expiration date, and CVC. The only difference is they don’t exist in a physical form.
• Digital cards. A digital card is the digital version of a payment card and will include an accompanying physical card.
• Digital wallets. While not a card itself, a digital wallet app stores payment information and digital cards on a smartphone, making it possible to make payments via a contactless payment terminal, if available.
• Disposable cards. These cards are like prepaid cards that can be loaded onto a digital wallet. Once the money is spent, the card number can't be used again.

Things to keep in mind when evaluating different types of cards

With many different card types available, it’s important to consider the potential benefits and cons. These could include:

• Fees. Check to see if the card charges an annual fee, along with fees for services like cash advances, late payments, balance transfers, and foreign transactions.
• Interest rate. Different cards will carry different interest rates. Some will carry lower interest rates and others will carry higher interest rates. This will vary depending on the issuer.
• Rewards. Some cards offer benefits like discounts, cash back, rewards points, or airline miles.
• Credit limit. Different cards will have different credit limits depending on the issuer. This is the maximum amount of money a lender will allow the cardholder to spend on a card.
• Credit requirements. Different card types require different levels of credit scores. Different banks and credit providers may also have different standards.

Learn about PayPal’s cards and credit products here.