Bank cards are a popular global means of payment and are a real alternative to carrying money and the risks that accompany it (Getty)
Bank cards have become a major part of our modern life. We buy, sell, pay our bills, shop for our goods, and book our plane tickets and hotels through these cards, which have become a practical alternative to carrying liquid money.
It is considered a very popular means of payment in various countries of the world. It is multi-use and has a number of advantages compared to other alternatives such as cash. It is a real alternative to carrying money and the risks that accompany it, but it may turn into a curse when misused. Hence, caution should be exercised in how it is used. dealing with it.
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A variety of bank cards are currently available to meet the needs and preferences of different consumers, and they differ from each other when it comes to how, when and where they can be used.
In this report, we will focus on the most common types of cards globally, which are: credit cards, debit cards, prepaid cards, virtual cards, and gift cards, enumerating the pros and cons of each, based on a number of specialized sites and platforms such as: “Forbes” and “Forbes.” BNC Bank, N2F, Banco Piablo, FinDo, and others.
credit cards
It is one of the most popular and convenient payment methods worldwide, and has become an integral part of modern finance, providing convenience and flexibility to consumers around the world.
The size of the credit card payment market reached $644.4 billion in 2023 (Reuters)
The size of the global credit card payment market reached $644.4 billion in 2023. IMARC Group expects the market to reach $1,200.6 billion by 2032, with a compound annual growth rate of 7% during the period 2024-2032. .
The market is witnessing steady growth driven by increasing preferences for online shopping, which provides convenience and flexibility in payment methods, and advances in payment processing technology to enable fast, secure and convenient payments.
With this type of card you do not need to have money in your bank account to make purchases. Each time you pay, the amount you spent will be deducted until you reach your credit limit, and you must then repay the amount to the bank, usually in installments and with interest.
It also enables you to make purchases online and in stores, pay bills, and even withdraw cash from ATMs (beware, this is a dangerous process with high interest and fees).
Credit cards help improve credit history and provide effective protection against fraud and theft. It also provides the opportunity to obtain points and discounts while shopping.
But it increases the possibility of accumulating debt, with high fees and interest. Late payments may result in high interest payments, which makes punctual repayment important.
Despite the benefits of credit cards, individuals must be careful to avoid accumulating debt and commit to paying dues on time.
Debit cards
This card differs from its predecessor in that it is linked directly to your deposited bank balance, as it requires the presence of funds in your bank account to make purchases, and if your balance is empty, this card will not work, and this means that you can only spend or withdraw the funds that you already have, according to the definition of the platform. "Capital One".
Debit cards feature no interest on purchases and the ability to prevent debt accumulation (Getty)
You can use your debit card to make purchases online and in stores, pay bills, and withdraw and deposit money into your bank account through an ATM.
The pros of debit cards are low or no withdrawal fees, no interest on purchases, and the ability to prevent debt accumulation because withdrawals can only be made from the real account balance. However, this comes with limited funds available and does not contribute to building personal credit history.
Prepaid cards
This type of card is usually used by those who do not want to use their credit or debit cards to shop online, out of concern for their financial security.
The prepaid card is issued by a financial institution, which feeds it with money as it goes, and you can set a higher ceiling for it. Once the financial balance on the card runs out, it stops working, and you need to refill the balance in order to return to work.
This type has a card number and expiration date just like debit or credit cards, but it is not linked to a bank account. You can refill the prepaid card and use it until it expires.
The paid card can be used to make purchases online or in stores and shops (where accepted), to pay bills, and to withdraw and add cash.
A prepaid card issued by a financial institution that replenishes funds with a maximum limit (European)
A prepaid card offers several advantages, as it prevents the possibility of excessive spending and debt accumulation, and is easily used without the need for a bank account. Additionally, it can be recharged for continuous benefit. However, it comes with some drawbacks, including fees for purchases and withdrawals, and may not be accepted in some stores.
Virtual cards
A non-physical payment instrument that replaces physical cards and cash, it is virtual meaning you cannot carry it in your pocket or among other cards in your wallet, and it exists virtually only as a set of data including the 16-digit card number, expiration date and verification code.
You can get a virtual card from any financial issuer, such as banks or some financial institutions on the Internet.
Some virtual cards are reusable, but some issuers offer temporary cards that can be disposed of, or can be used only once.
You can store the virtual card on a device such as a mobile phone or smart watch, and you can use it for contactless payments in stores or online, but you cannot withdraw money using the virtual card.
It also offers high levels of security, as real account details are hidden, which is one of the main motivations for subscribing to this service. They can be easily added to your digital wallets like Apple Pay or Google Pay and are ready to use immediately upon release, usually with no fees involved. However, it comes with some drawbacks, as it can only be used in stores via a digital wallet, and is temporary, making it unsuitable for recurring payments or direct debits.
Gift cards
Similar to prepaid cards, gift cards are also preloaded with funds. What makes it different is that once you spend the money on it it is no longer in service, you cannot reload the gift card or top it up with new money.
Gift cards come with positive features like controlled spending and security (Shutterstock)
The gift cards were initially closed and designated for use in specific stores, and could not be used outside the specified location. The situation is different now, as gift cards are issued that can be used anywhere, and are known as “open-loop”.
You can use the gift card to make purchases at retail stores, gas stations, restaurants and convenience stores that accept it.
They come with positive features such as controlled spending and security, as they usually contain small amounts of cash and cannot be reused. It comes without the need for a bank account. However, there are some drawbacks, as the scope of use is limited and requires payment of an issuance fee. Use may also be subject to special terms and fees that depend on merchant policies.
Finally, after you know the pros and cons of each type of these cards, you can now choose the appropriate type of card, and in all cases you must deal with it carefully in a way that maximizes its positives and minimizes its negatives and risks to your life, your ways of living, and your money.
Source: Al Jazeera