ATM, Debit, and Credit Cards: What's the difference?

ATM, debit, and credit cards may look alike, but they are different in important ways, including how they may affect or not affect your credit.


What is an ATM card?


An ATM card lets you withdraw cash from your bank account at an ATM machine. You can’t use an ATM card to make purchases directly in a store or online.


What is a debit card?


A debit card lets you withdraw money at an ATM, and also lets you make purchases directly in a store or online. In this sense, it behaves like a credit card. However, unlike with a credit card, purchases you make with a debit card are immediately paid for using funds from your checking account. Therefore, you don’t receive a monthly bill, but your bank statement will list your transactions for your records.


What is a credit card?


A credit card lets you withdraw money from your bank account at an ATM, as well as make purchases directly in store or online. Money does not come out of your bank account automatically to pay for your purchases. Instead, your purchases are essentially short term loans from the credit card company. Your monthly credit card statement tells you how much you owe. To build and maintain good credit,  pay your credit card statement on time and in full every month.


If I only use a debit card, I’ll never fall into unmanageable debt. Isn’t that good for my credit score?


It’s true that using only cash, an ATM card, or a debit card may help you avoid unmanageable debt, but this won’t help build your credit score, since effectively, you are not utilizing any loan. The most direct, efficient path to great credit is to get a credit card, keep it open, and—this is key—manage it well by paying your bills on time and in full every month.


Don’t I need a credit history to qualify for a credit card?


Many credit card companies won’t issue a credit card to someone who has little or no credit history. This can be a problem if you’re new to credit—for example, if you’ve recently moved to the U.S. for work, or if you’re a young adult who has recently started your professional life.The trick is to find a credit card company that is willing to look at other factors besides just credit history when reviewing applicants. For example, Jasper uses a holistic approach and innovative technology to assess applicants. We look at your potential, reviewing things like past and current employment, not just your credit history. In fact, credit history is not required to apply if you don’t already have one.   

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