There are many payment options available to consumers today. Amid the world of plastic money, two cards, which have a great similarity between them, are debit and co-branded prepaid cards. These two cards can often confuse users and make them uncertain about which one to opt for. If you are facing a similar dilemma, keep reading to discover some facts about both of these cards:
Will There Be Any Credit Issuance? There is no credit issuance with the use of a prepaid card. It is a simple process of loading your money and using it through a co-branding prepaid card across the world. However, there is an overdraft facility for debit cards by the banks even though debit card holders can easily withdraw money from their accounts.
Cardholder Eligibility in Terms of a Credit Check. It seems that banks issuing prepaid cards do not make their customers suffer much. There is absolutely no credit check. When it comes to debit cards, on the other hand, they would go for one to certify that their account holder does in fact have the right credit score and rating.
Interest Fees. Prepaid cards do not allow people to borrow money and thus, no it nest is involved. However, in case of overdue overdrafts, debit cards are charged with interest fees with no interest-free periods.
Are There Any Card Charges? A small maintenance or opening fee is usually charged in case of prepaid credit cards, especially for co-branded prepaid cards. While in case of debit cards, a certain fee is charged applicable to the bank account and penalty fee is also charged in case of overdue overdrafts.
The Credit to be Issued. Since prepaid cards are yet another method to use an individual’s money, the person will not be issued any credit by means of using this card. In order to use it effectively anywhere in the world, you have to load the money and get it linked with a co-branded prepaid card. Most of the people are likely to find the debit cards more appealing for the fact that they have an overdraft facility even as they agree to let them withdraw the required amount from their account only.
ATM Usage. Although debit cards can be used at ATMs, the same cannot be said for prepaid cards. There are very few prepaid cards, which have this facility available of being able to withdraw money from your account via an ATM.
In conclusion, prepaid and debit cards have their similarities and differences. The cancellation and usage policy is almost the same for both. This indicates that these cards can easily be utilized all around the globe and can be cancelled in case of theft or loss.
Debit cards are a good option for those cardholders who already have bank accounts and will not be tempted to reach their expenditure limits. On the other side, for youngsters who do not have bank accounts and will be tempted to take loan, co-branded prepaid cards are the best option. So make the right selection today in accordance to your needs!. This article, Debit Cards Vs. Prepaid Cards – Which Should You Choose? has free reprint rights.
