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The Prepaid Cards Verses Debit Cards

By Expert Author: Neha Sharma

Banking institutes have different kind of banking cards that is offered to the customers. These banking cards include debit card, ATM card, prepaid card and credit card. These banking cards have different purposes and functions. In this article, we give you the comparison of prepaid card and debit card.

• Basics of these cards

When a customer opens a bank account, he is normally offered a debit card or ATM card, as part of the account facilities. This card is normally linked to the user’s account and he can use this card for any financial transactions. If the card is swiped for a certain amount, the same amount will be deducted in the account directly. With a prepaid card, the amount is reloaded on the card directly. This card can be used to for any financial transactions too, but only the amount that is loaded on the card to be spent. This card can be refilled for countless times with any amount you see fit.

• Travelling abroad

Debit cards are rarely used when customers are abroad. That is because, when it is swiped, the amount that is deducted is in the local currency. Added to this transaction, there are several other expenses such as the value of the exchange rate. Thus there is a high chance, that the customer will lose a lot of money, if his transactions are high. This also works with other banking cards like the ATM card and the credit card. With prepaid cards, a certain amount is loaded onto the card. If the customer is going abroad, he will load the card with the local currency of the country he is travelling to. Therefore, he won’t lose so much on the transactions made in the foreign currency.

• Limitations

There are certain limitations to debit card and the prepaid card. The debit card is linked to the account of the user. So he is limited to using the amount that is present in the account only. If he over draws, he will have to pay the bank for the overdraft services and sometimes, added interest. In some cases, the purchases will be declined once that limit is reached. Prepaid cards have a limited amount of funds that is loaded onto the card. The consumer will be able to spend only that much amount that is present on the card. If the prepaid cards are linked to specific merchants, they might have an expiration date. There is also a distinct possibility of losing the money that is not spent on the prepaid card, after this expiration date.


Author Bio :- Neha Sharma; a finance student, has extensively studied about various banking cards. She has gathered a lot of information on debit cards, ATM cards and prepaid cards. She would like to share this knowledge to the public in the hope they can benefit from it.

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