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IT'S IN THE CARDS

Credit, debit, pre-funded - it can be hard to keep track of all the different cards available today. It's easier, though, when you know how different types of cards work.

Think credit cards, think loan
When you use a credit card, you take a loan from the company or bank that issued the card. Your purchases are totaled on a monthly bill. In most cases, if you pay that bill in full and on time, you'll owe no interest. Pay the minimum, though, and you'll get socked for interest - plus late fees if you pay after the bill is due - on the money you've borrowed. Visa, MasterCard and Discover are all examples of credit cards. It's important to remember many, if not all, credit card issuers won't issue cards to people who don't meet the issuer's minimum age requirement.

Debit cards take money directly from your account.
Debit cards, sometimes called ATM cards, look and are used like credit cards - but they aren't. Instead of drawing on a line of credit, they act like a check, moving the amount of your purchase from your checking or savings account to the merchant. Generally you can't use a debit card to spend more money than you have in your account. That's bad if you want a loan, but great if you're concerned about avoiding overspending or interest and late fees. Debit cards are typically available from your bank or credit union. Different issuers may have different age restrictions, a situation which is also true for credit cards.

Pre-funded cards have preset limits.
Overspending is no problem at all when you use pre-funded cards. These cards are linked to an account funded with a certain amount of money. When you use the card, some of that money is moved from your account to a merchant. When you run out of money, you or your parents can replenish the account with more cash, allowing you to make more purchases. Pre-funded cards can be a good way to learn about using a credit card - but keep in mind that they do nothing to help you establish a credit history. A variety of banks and credit issuers offer pre-funded cards.

 


 



 
 
Please consider the objectives, risks, charges and expenses of any Columbia fund carefully before investing. Contact your financial advisor for a prospectus, which contains this and other important information about the fund. You should read it carefully before investing.