Bank Cards - Credit, Debit and Prepaid Cards

There are many types of Bank Cards we have now a days like Debit Card, Credit Card, Prepaid Card, Gift Card, Traveler's Card etc. All these cards issued by banks are collectively called Plastic Money. We all are using these cards in one or more way in our day to day life. Be it a means to withdraw cash from our bank account, or booking railway, Airline or Movie tickets or Shopping, Fee payment, all these Bank Cards have changed our life in big way especially the way we shop. These Bank Cards may be of Visa, Master, Rupay, Discover, DinersClub, American Express etc.

Let us discuss major Bank Cards one by one

 

 

Debit Card

• Debit Card is most widely used Card. It is also called ATM Card in general.

• Debit Card is always linked to a bank account. It can only work when we have balance in our linked bank account

• You can withdraw money from ATM, shop online, swipe offline on Point of Sale (PoS) terminals using Debit Card.

• Debit Card is also used in activating internet banking, regeneration of login password, transaction password. This feature may vary depending on your bank policy

• Debit card is a per-requisite to generate UPI PIN. If you forget your UPI PIN, you can regenerate the same using your debit card details.

• Many Banks have their mobile banking application and to register on these applications you may use debit card details.

• Debit card may also be used to transfer funds from one card to other card but this feature is not supported by all the banks and all the ATM Machines

• We can perform some more basic function on ATM machine with our Debit Cards like updating registered mobile number, requesting cheque book, generation of mini statement, linked account balance inquiry etc. These features may vary from one bank to other.

 

 

Credit Card

• Credit Cards are a type of loan product of bank. It should not be confused with Debit/ATM Card.

• Credit Cards are not linked to a bank account. You can apply for a credit card even without maintaining bank account in with your Card issuing bank.

• Since Credit Cards are a loan product, therefore there is no need to maintain any balance in any of your bank account while using Credit Card.

• On the basis of your creditworthiness and Credit Score, card issuing bank decides the credit limit which you can utilize.

• Anyone with bad credit score can apply for credit card against bank fixed deposit. This will also improve your credit score in long run

• Card issuing bank decides one billing date and whatever credit limit you have used on that billing date is billed to you. You need to clear this bill by the due date which is generally 15 to 20 days from the billing date.

• If you clear your dues by the due date, then you don’t need pay any interest to the bank. Which basically means that it is a interest free loan.

• For example if your billing date is 10^th of the month then whatever you have spend till 10th will be billed to you and you need to clear that bill by the due date which may be between 25^th to 30^th of that month.

• In above example, if you shop on 11^th of the month say April then you will be billed on 10th of May and your due date will be between 25^th to 30^th May. That means you get 45-50 days interest free credit

• In above example on the other hand if you shop on 9^th of April then you will be billed on 10^th of April and your due date will be 25^th to 30^th April. That means you get around 15 days interest free credit

• Credit Card comes with an annual membership fees which may vary from ₹500/- to ₹10000/- depending upon the variant and features of card. Some basic Credit Cards are lifetime free.

• Banks also provide attractive discounts, reward points, vouchers on using their credit card as their promotional effort

• Credit Cards are used like we use our Debit card while shopping online or offline.

• We can withdraw cash also but if carries interest which may vary from 24% to 48% p.a. Therefore we should not use Credit Card for cash withdrawal

 

 

Prepaid Card

• Prepaid Card and Gift are same with difference that Gift Card cannot be reloaded and you cannot withdraw cash with Gift Card

• As the name suggest, prepaid card are issued for a particular amount and this amount has to be paid in advance to the bank and bank load that amount in your prepaid card.

• Generally prepaid card carries particular validity which may vary from 24 months to 60 months

• These cards can be reloaded once the loaded value is exhausted

• Prepaid Cards can be used to shop online, Offline at PoS terminals, in ATM to withdraw cash.

• In order to avail a prepaid card you don’t need to maintain any bank account.

• Prepaid card are issued with fees. You may be charged for card issue, pin generation, reload, ATM transaction

• No credit score is checked before issuing the prepaid card. Therefore if a bad credit score holder wants a card which is not directly linked to his bank account, he can use prepaid card.

• Unlike Credit and Debit card which should be used by the person to whom the card is issued, the prepaid card can be gifted to your loved ones

 

 

I have covered maximum aspects of Bank Cards which a person should know before approaching his Bank to get the same issued. The points I have covered are applicable to maximum cards but now a days due to cut throat competition banks are coming up with more and more cards with new features, validity, per-requisites, eligibility etc. Therefore this post may not hold true for very few cards. Readers are requested to check with your bank regarding the updated features and charges of the card you intended to apply for.