Comparing cards: Debit, credit or prepaid
Do you know the difference between a debit, credit, and prepaid card?
Although they may show a network logo such as Visa or MasterCard, the three types of cards are different. The only thing in common is you’re likely to use one of these instead of cash.
What is a debit card?
As one of the most used cards, a debit card is directly connected to the funds in your checking account. Customers use debit cards for the convenience so they can access money without writing a check or going to an ATM withdraw cash. Debit cards may be used for shopping online or in-store, or at an ATM to withdraw cash. Keep in mind that any transaction that you make with this card, immediately affects the available balance in your checking account.
Debit cards can also provide perks such as cash back options on purchases as well as rewards for usage.
As a responsible debit card holder, you must review your statement regularly to avoid problems with unauthorized purchases, keep track of your spending to ensure you will not incur overdrafts, and report lost or stolen cards immediately. Doing these simple steps and reporting problems to the bank as soon as possible can mean the difference of whether you will be responsible or not for any losses incurred.
Interested in a checking account and debit card from Adirondack Bank? See our personal checking comparison [link: https://www.adirondackbank.com/Personal-Checking.aspx] for full details including requirements of each account type.
What is a credit card?
Not part of your bank account, you can make purchases with a credit card by borrowing from a credit limit. This is based on your credit score and other factors.
You’re offered increased security and long-term payment options; however, make sure to read the fine print before applying for a credit card. When you’re approved, you’ll receive a credit limit. For instance, if you get a card with a $2,000 limit, you can spend up to $2,000. You can carry your remaining balance over from month to month, but just know that you’ll be charged interest on the balance until you pay it off.
Credit cards may offer cash back or reward points like a debit card.
If an unauthorized purchase is made on your credit card, contact the credit card company immediately. Borrowers may be provided fraud protection, taking you off the hook for fraudulent purchases while the issue is investigated. Read the disclosures to see what the liability and loss coverage is.
Some downsides of a credit card may include:
- Late or missed payment fees.
- Cash advance fees.
- Interest on outstanding balances.
If you’re interested in applying for a credit card with Adirondack Bank, visit your local branch for more details.
What is a prepaid card?
A prepaid card allows you to add funds that aren’t associated with your bank account. You can spend up to the amount on the card. They are often used as gifts by people with limited access to banking options or those who are on a limited budget.
You can load money on the card and then make purchases or withdraw money from an ATM. Funds can be loaded by direct depositing, at retailers, on reloadable cards much like a gift card, or transferring from an existing bank account.
You don’t need approval to get a prepaid card.
Much like debit cards, customers are provided with the same liability and loss coverage if they report a lost or stolen card immediately. However, to receive that coverage, you must register your card. If you fail to register it, you’re not covered if it’s lost or stolen. Make sure to read any fine print associated with the prepaid card.
Some downsides of a prepaid card may include:
- Fees including activation, reloading, transaction, ATM usage, and monthly service. They may also charge for balance inquiries, inactivity, and bill payment.
The information in this article was obtained from various sources not associated with Adirondack Bank. While we believe it to be reliable and accurate, we do not warrant the accuracy or reliability of the information. Adirondack Bank is not responsible for, and does not endorse or approve, either implicitly or explicitly, the information provided or the content of any third-party sites that might be hyperlinked from this page. The information is not intended to replace manuals, instructions or information provided by a manufacturer or the advice of a qualified professional, or to affect coverage under any applicable insurance policy. These suggestions are not a complete list of every loss control measure. Adirondack Bank makes no guarantees of results from use of this information.
