Difference Between Prepaid Card and Debit Card

Prepaid cards and debit cards, often used interchangeably, are quite different and have different features. In this article, we’ll look at the difference between prepaid card and debit card as well as their pros and cons, which can help you choose the suitable payment method as per your needs. 

What is the Meaning of Prepaid Card and Debit Card?

A prepaid card is a payment card that can be used to make purchases and pay for services. As a card holder, you would have to preload the card with a certain amount of money. You can then use the card till these loaded funds get exhausted and add more money when the balance gets low. Note that these cards are not linked to bank accounts

A debit card, on the other hand, is a type of card that is linked to a checking or savings account. When you, as a cardholder, use the card to make a purchase, the amount is deducted directly from the said account. 

Different Types of Cards

Before moving on to the differences between debit cards and prepaid cards, let’s have a look at the other major types of payment cards in the UAE - 

• Credit Cards: These cards allow you to borrow money from a financial institution, usually a bank, and use it to make purchases. Keep in mind that the amount that you borrow has to be paid back, usually with interest.
• Gift Cards: These cards are given as a gift and can be used to make purchases at a given store or online. The amount of money on the card is preloaded and cannot be recharged.
• Loyalty Cards: These cards are used to track customer purchases and provide discounts or rewards based on those purchases.
• Charge Cards: These cards allow you to purchase items with the promise that you will pay the balance in full at the end of the month. You will be charged interest if the balance is not paid in full.

Difference Between Prepaid Card and Debit Card

Tabled below are the major differences between prepaid cards and debit cards - 

Prepaid Cards	Debit Cards
These cards are loaded with a set amount of money and are not linked to any bank account. You can add money to the card at any time and check the card's balance.	Debit cards are connected to a bank account. When you use your debit card, the money is taken directly from your account. You can always check your balance with a debit card linked to your checking account. Note that you can only add money to your account, not the debit card.
The amount loaded by the cardholder is used for transactions and gets deducted from the balance.	Money is drawn directly from the linked account for purchases.
Prepaid cards are not linked to bank accounts.	Debit cards are linked to bank accounts.

Let’s now have a look at the major advantages of prepaid cards and debit cards - 

Advantages of Prepaid Cards

• Security: Prepaid cards offer a high level of security as the user is not required to provide any personal or bank account-related information. 
• Convenience: Prepaid cards provide the convenience of making transactions without the hassle of carrying cash around. 
• Budgeting Tool: Prepaid cards make for a great way to limit spending and keep track of your budget, as you can set limits with respect to the amount loaded in the card.
• Easy to Maintain: Most prepaid cards have no minimum balance requirements, which makes it considerably easy to maintain them. 
• Offers: Several prepaid cards offer rewards and cash-back on all eligible purchases.

Advantages of Debit Cards

• Convenience: Debit cards make for a convenient payment option for online and in-person purchases. They are ideal for everyday purchases such as groceries, gas, and other small expenses. 
• Security: Debit cards offer security as they are linked to a bank account, meaning that your transactions can be tracked and monitored to detect fraud. 
• Wide Acceptance: Debit cards have been around for a while and are now accepted for purchases worldwide. 
• Low Fees: Debit cards generally have lower fees than credit cards, which makes them a more affordable payment option. 
• Rewards: Just like prepaid cards, most debit cards offer rewards in the form of reward points or cash back when you use your card for transactions.

Wrapping Up 

You can find various options with respect to financial instruments in the UAE, with prepaid cards and debit cards being among the most popular ones. While both types of cards offer the convenience of payments, there are significant differences between prepaid cards and debit cards as we saw in the article. 

Prepaid cards are preloaded with a balance, while debit cards are linked to a bank account. Prepaid cards can generally be used wherever credit cards are accepted and have various features and benefits. While prepaid cards provide great security as they are not linked to any bank account, debit cards make it considerably easy to monitor your transactions.

Ultimately, the choice between debit cards and prepaid cards would depend on your specific requirements, usage, profile, and more.

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