But are you 100% certain that you understand the difference?
A debit card, also called a settlement or payroll card, is linked to a cardholder’s check account in a bank. Although different cards come with different spending options, benefits, and fees, certain debit cards may allow you to withdraw more money than you might have on your account at that moment. In such situations, a bank may charge you a fee to cover the cost of an ATM withdrawal or a purchase that exceeds the amount on the card. Consequently, a cardholder is also required to repay the overdraft.
Unlike a debit card, a prepaid one is not linked to a bank account and the money you intend to spend must be loaded onto the card in advance. The idea behind a prepaid card, other than simplicity and practicability, is to prevent you from spending more than you have.
Both cards come with a Mastercard or Visa logo and have a similar function: you get to make purchases when you don’t have any cash on you.
In terms of costs, though in most cases debit and prepaid cards are free, a cardholder is usually obliged to pay a monthly fee which differs from one bank or a card issuer to the other.
Debit & Prepaid Card Differences
What sets the two apart is the fact that a prepaid card can be linked to a specific business brand. Thus, unlike with a debit card that can be used in any store or place of business that accepts Visa or Mastercard, prepaid cards that are linked to a specific business can only be used at that place of business or one of its affiliates.
A prepaid card limits you to the amount you have previously loaded, while a debit card allows you to spend the sum you have on the associated bank account.
A prepaid card can also come with an expiration date, especially if issued by a specific merchant. In that case, you are advised to spend the money you have prior to the expiration date, as you might not be able to withdraw the leftover sum past that day.
Prepaid cards are also often issued as gift cards. For instance, we offer a Mastercard gift program to issue cards that act as vouchers. A cardholder can use it to purchase whatever they want to in an affiliated online or physical store.
A debit card can be used for as long as the cardholder maintains the bank account their card is associated with. Even if they spend almost an entire amount, once additional funds reach your check account, you can start using the card again.
Upon spending the amount you have on your prepaid card, you can simply reload it with cash or check. Generally speaking, this type of card can be reused until the expiration date for as long as you keep reloading it.
Due to numerous advantages that accompany both types of cards, it is up to an individual to make a final decision depending on their immediate needs.
UniCard has been created with a cardholder’s specific requirements in mind. Our aim was to provide a card that will deliver the simplicity of use and practicability, along with a multitude of additional benefits. To find out more, check out our website for more information about the card’s features and application process.