A debit card is connected to your checking account and allows you to pay for goods and services through the Visa network in a way that will come directly out of your checking account. When using your debit card, you can use it in two ways: 1) As a PIN (personal identification number) based transaction, where you swipe your card and then enter your PIN number at the time of purchase, or 2) As a credit based transaction, where instead of using your PIN, you swipe your card and then sign your name at the time of purchase. Regardless of which method you use, your purchase will be deducted directly from your checking account. There is no charge for obtaining a debit card and you may use it as many times as you wish without any monthly service charges.
A credit card is a payment card issued to users (card holders) who then pay for goods and services based on the card holder’s promise to pay for them at a later time. The card issuer (Bank) creates a revolving account and grants a pre-determined line of credit to the card holder from which they can borrow money for payment of goods or services and/or as a cash advance to the card holder. Credit cards allow the consumers to maintain a continuing balance of debt, subject to monthly interest charges along with a required monthly minimum payment from the card holder. Note that the card holder can choose to pay off the balance of the outstanding charges on a monthly basis and avoid paying any interest charges. Monthly payments must be made by the due date to avoid late charges. Be aware that some credit cards have annual fees associated with them, while most do not.
A gift card in most cases resembles a credit card as there is a display or specific theme on a plastic card about the size of a credit card. The card is identified by a specific number or code, not usually with an individual name, and thus could be used by anyone. They are backed by an online electronic system for authorization. In most cases the cards will have a magnetic strip, which is read by an electronic credit card machine. Many cards have no value until they are sold, at which time the cashier enters the amount which the customer wishes to put on the card. Gift cards are divided into “open loop” cards and “closed loop” cards. The former are issued by banks or credit card companies and can be redeemed by different establishments, the latter by a specific store or restaurant and can only be redeemed by the issuing provider. Be aware that some gift card issuers impose expiration dates and/or fees, so it pays to shop around.