All around the world, people are using
different kinds of cards for their payments, but they never fully understand
the functioning of their own card. While most people may know the basic
difference between a debit card and a credit card, others do not even
acknowledge the existence of prepaid debit cards. Although these three cards
have similarities such as the expiration date, card numbers, and payment
providers, the functioning of each card is far from being the same. This could
be a reason why individuals become confused about what card would be the most
beneficial for them and which one they should get for themselves.
In order to make this important decision, it
is important for all first-timers (and others) to understand the difference
between each card and be aware of its functions/facilities. Therefore, if you
are planning on getting a card for yourself, here is everything you should be
Prepaid Debit Cards
cards are not linked to any bank account but they will allow you to spend
money. Moreover, these cards allow you to do normal bank transactions as well
like transferring, card payments, withdrawals, and more. All you have to do is
put money in the card so you can spend it. After reaching its limit (the amount
of money on the card), you can only resume the services after reloading the
With this card, you do not exactly have to
open a debit or current account. You will have an electronic wallet set up for
you online by the payment provider. That will be your “bank account.” If you
are not loading a hefty amount on your prepaid debit card, they can be
non-transferable and anonymous. Some payment providers also give slips that
have the banking information stated (like your name).
Before choosing one, make sure you are surveying
options for the best
prepaid debit card because they are fairly new. Moreover, if you are the
owner of a small business, a prepaid debit card would be the best option for
you. It will make sure you are not overspending your hard earned money because
this card has limitations.
With a debit card,
you will be able to only use the money that is presently in your account. Debit
cards are most commonly MasterCard or Visa and they can be used all around the
Debit cards are most likely linked to
checking or current accounts. Any withdrawals or payments made with this card
will make sure the money is being deducted from your bank account, which means
you will not be at risk of spending excessive amounts of money.
With a debit card, it is important to keep
checking your account balance so that nothing seems too skeptical later on. MasterCard
and N26 users will receive live notifications on their phones if the card is
being used and if the money is being taken from the account. Along with the
amount that is being deducted, these users will also be informed the remaining
balance in the account. This way, keeping a check of the budget and the money
in the account is easier.
If you qualify for one, your bank will provide
you with an authorized overdraft. These overdrafts have limited amount of cash
that you can use. Moreover, they get accompanied by high interest rates if the
account stays on a negative for too long. Therefore, keep in mind that an
overdraft can be pricey and it is not free—ever.
For daily use, instant debit cards are the
best option. They can be used abroad or at home despite what the balance may
be. In addition, they are the most popular and cheapest debit card in the
cards and debits cards are extremely different. Unlike a debit card, with a
credit card, you are directly paying from your bank, which is why you have the
“credit.” Every month, you will receive a bank bill that will indicate how much
money you have spent over the month. Depending on your geographical location, you
will have to pay the money back in either parts or all of it to the bank before
using the card for another month. In European nations, you must pay back all
the money before using it again, whereas in the UK and US, you can pay it in
parts, but a high interest rate will accompany it.
The money that you are spending is giving
to you by the payment provider or the bank that you have issued the card from.
This is the reason why these cards have the word credit attached to them. In
addition, when getting the card, you have the freedom to sign a credit
agreement. When you are doing so, you and the payment provider get to choose
the budget for your credit. Depending on how much you are making, make sure to
choose a reasonable amount.
Credit cards can be risky business. With no
or less account of how much you are spending, people tend to overdo it. This
results in hefty bills to pay later. Even if the payment is being done in
parts, later on, the high interest rates cause it to skyrocket even more. In
this case, this card type is not highly recommended.
Choose the Right Card
In order to figure out the best card for
yourself, here are the top 4 things you should consider before making the final
- Check and see where the card
will be accepted. See if you can use it everywhere. If it can be used
nationally and internationally.
- Check out the fees and rates
you will have to pay for. For example, international transfers, overseas
withdrawals, foreign currency payments, and more.
- Check to see if the card and
account meets your needs financially (see the insurance policies, guarantees on
purchase, premium services, and more).
- Make sure the money is insured.
With this knowledge, you can make the right
decision when choosing a card for yourself.