Cards are a convenient way of paying when you can't or don't want to use cash.

For example, you can pay over the phone for cinema tickets, pay online for books or CDs or pay over the counter so that you don't have to carry a lot of cash. The cards you need for this are debit or credit cards.

Cash cards allow you to use a cashpoint machine (also known as an ATM, which stands for Automatic Teller Machine) . On the other hand, you will often use a cheque guarantee card when you pay by cheque. Some cards can be used in all these different ways.

A bank may offer you various types of cards with your bank account. These allow you to take money out of cashpoint machines, guarantee your cheques or make payments from your account.

Cashpoint card
This is the simplest card and allows you to take money out of a cashpoint machine. The bank will send you a personal identification number (PIN) which you use with your card. You can't buy anything with this card; you can only use it in cash machines. You can practise using a cashpoint card with our ATM (cashpoint) simulator in the Workshops section.

Cheque guarantee card
This is a guarantee to retailers - shops, hairdressers, car mechanics - that the bank will pay your cheque. You show it when you hand over your cheque and the retailer will check the signature (make sure you do the same one every time!) and make a note of the number and expiry date. The maximum amount you can write a guaranteed cheque for is shown on the card.

Debit card
A debit card is a way of paying out money from your current account. You can only spend the money available in your account. There is usually a limit on the card too. A debit card can be used to make payments over the phone, online or over the counter. You can make payments anywhere the Visa or Mastercard symbol is shown.

This card can usually also be used as a cashpoint card and a cheque guarantee card. So it saves you carrying lots of other cards.

Modern cards have a security number on the rear signature strip which always ends in 3 digits.

Quite often you will be asked to quote these 3 digits when you use your card on the Internet or over the telephone. This adds an additional level of security to 'card holder not present' transations.

Activity: Move your mouse pointer over the debit card (above) to find out what each area means and how it reflects you and your bank account.

Now you try. Name the features yourself. Remember you can always refresh your memory by moving over the item.

Credit card - Buy now pay later!
You can use a credit card over the counter, online or over the phone. The money does not come out of your bank account. Your credit card provider lends it to you and then you pay it back. They send you a statement every month. You pay interest on what you owe.

Activity: We have an activity that helps demonstrate the difference between shopping with money that you have saved up and using your credit cards. Click here to have a go.

Prepaid cash cards
You can use a prepaid cash card in the same places as a credit card. The difference is that you don’t run up a bill. Instead, you load money onto your card in much the same way that you load credits onto a prepaid mobile phone. And because you can’t spend more than you have on your card, you don’t need a bank account or to have a good credit rating in order to use one.

You get a pin number just like any other cash card and you can use your card to withdraw money from cash machines too, although you will be charged for this and some other services such as using your card abroad.

If you lose your card, as long as you report it, you won’t lose your money. Instead, you’ll be issued with a new card, which will have your cash loaded onto it.

Store cards
Some larger shops and retailers operate their own credit card schemes, with a card that can usually only be used in their own outlets.

They are often marketed with a range of offers that appear very tempting, such as instant free credit or a discount on purchases. But beware – there is almost always a catch, as most store cards charge a very high interest rate, which can make your bills mount up very quickly unless you always pay your account off in full as soon as you receive a statement.

Loyalty cards
Lots of supermarkets and other large retailers offer another type of card, usually known as a loyalty card.

These shouldn’t be confused with store credit cards – you can’t actually pay for goods or services with them.

Instead they give you access to ‘rewards’ or special offers from the supermarket in question.

Examples of loyalty cards include the Dividend card operated by the Co-op, the Nectar card operated by Sainsbury's, Debenhams, BP and Barclaycard amongst others, or the Boots Advantage card.

Using one of these cards won’t usually cost you any money, and you may benefit from the rewards on offer. Stores benefit from these cards as they allow them to collect information on your personal spending habits, which they can then use in direct marketing.

How To Memorise Pin Numbers - www.sharpsoftware.co.uk/pin/
This site contains a useful method for remembering your pin numbers for cash machines, credit cards and online registrations.