Online Financial Tips

In today’s world, it sometimes seems as if there are more types of plastic card than stars in the sky. Yet in fact, all these cards generally fall into one of a few categories and that includes debit cards.

Card types

Typically, “plastic” will fall into categories such as:

credit cards; charge cards; debit; prepaid cards.

Each of these has distinctive characteristics.

Credit cards

These carry a permanent credit limit which works like a loan. You draw down parts of that loan every time you use it.

Very useful in some circumstances but they carry the risk of running up debt that you may not always be able to manage.

Charge cards

This form of plastic varies between things such as store account charge cards (which is a form of loan in effect) and ones that carry potentially unlimited credit but where you must pay it off immediately the following month.

The latter forms of charge card tend to be restricted to high net worth individuals.

Debit bank cards

A card linked to your bank account. When you use it, the money is taken from your bank account.

Although no formal credit limit exists, in practice if you lose count of your spending your bank may still approve the transaction, which may mean you’ll have an unauthorised overdraft.

The fees for an unapproved overdraft may sometimes be significant.

Prepaid cards

Available online from prepaid card providers, this form of “plastic” is loaded with cash by you – typically at a PayPoint but also possibly via bank transfer if the provider offers such facilities.

With prepaid cards, you cannot spend more than what you have previously loaded onto it.

Although they are misleadingly sometimes called prepaid credit cards, in fact there is no risk that you’ll run into debt with them.

That may offer advantages if you’re trying to control your spending, want a secure way of carrying money around with you or even if you want to provide your children with some spending money for a day out.

As such, the prepaid card is perhaps closer to debit cards than credit cards – but without the risk of running into overdraft or giving unrestricted access to your bank account!

• Prepaid Credit Cards For Kids
• Are There Free Prepaid Debit Cards?
• Prepaid Cards Or Debit Cards – What’s The Difference?
• Prepaid Cards For Business
• Universal Prepaid Debit Cards
• Prepaid Cards
• Prepaid Credit Cards – Things To Know When Apply For One
• Prepaid Credit Cards Overview
• Why Use a Reloadable Prepaid Debit Card?
• Prepaid Credit Debit Cards – The Good and The Bad