Credit, debit and prepaid cards: how these cards differ


When we think of payment methods, we usually think of different types of plastic cards that we carry around in our wallets every day. These come in three main forms: Prepaid, debit and credit cards. But do you really know the difference between these cards? Let's delve deeper into this topic and unlock the secrets of these cards.

Briefly and concisely in the video:

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What are prepaid cards?

A prepaid card is basically like a voucher that you can top up with money. Imagine you're buying a gift card for a friend. You pay a certain amount and your friend can then spend it in the respective store. Prepaid cards work the same way. You load a certain amount onto the card and can then use it for purchases until the money is used up.

The biggest advantage of a prepaid card is that it helps you control your spending and avoid debt. You can only spend the money that you have previously loaded onto the card. That makes them a great choice for budgeters and people who want to keep an eye on their spending. The Bling Card It's also a prepaid card, by the way. Children can only spend as much money as is on the card.

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What are debit cards?

A debit card, also known as a bank card, is the reflection of your bank account. The card is directly linked to your account and every purchase you make is immediately deducted from your account. This means that you can only spend as much as you have in your account.

There is, however, one exception. If your bank account allows an overdraft facility, you could theoretically also incur debt with your debit card. If you spend more money than you have in your account, your account may fall into the red. This overdraft feature can be helpful if you have unexpected expenses, but it can also result in high charges if you use it frequently.

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What are credit cards?

A credit card is like a small loan that you get from the bank. Unlike prepaid and debit cards, which require you to deposit money into your account first before you can spend it, a credit card allows you to spend money first and then pay it back later.

This can be particularly useful if you want to make a larger purchase but just don't have enough money available. There's a catch though: If you don't pay back the money by the end of the month, you'll incur high fees and interest rates. This can be very expensive if you're not careful.

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Conclusion: Which card is the best?

Choosing the right card depends on your personal needs and lifestyle. If you're on a strict budget and want to avoid debt, a prepaid card could be the right choice for you. It helps you control your spending and not spend more money than you have.

A debit card could be the right choice for you if you want direct access to your bank account and track your spending in real time. However, it is important to note that you could use a debit card to overdraw your account if your bank account allows an overdraft facility.

A credit card is a good option if you want to make larger purchases and want to be able to repay them over a longer period of time. But be careful: If you don't pay your credit card bill on time, you could incur high fees and interest rates.

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