Types of cards
Cards can be classified based on their usage, issuance, and payment by the cardholders. There are three types of cards-1. Debit cards
2. Credit Cards
3. Prepaid Card
Debit Cards
- A debit card can be used to withdraw cash up to the customer’s bank account’s limit. Therefore, debit cards are linked to bank accounts and issued by banks.
- To, use debit cards customers should have enough balance. Debit cards are used for withdrawing cash from an ATM, purchase of goods and services at Point of Sale (POS)/ E-commerce (online purchase) both domestically and internationally. Also used for domestic fund transfer from one person to another.
Credit Cards
- In the case of credit cards, a customer can withdraw money beyond the amount of money present his bank account. However, there is a credit limit for the cardholder up to which the extra money can be withdrawn.
- Also, the withdraw money will have to be paid back as dues along with interest charges as applied by the issuer of card within a time limit.
- It issued by banks / other entities approved by RBI.
- These cards are used to purchase goods and service at E-commerce (online purchase)/ Point of Sale (POS) through recurring transaction/ Interactive Voice Response (IVR) or Mail Order Telephone Order (MOTO). In addition, it can be used domestically and internationally (provided it is enabled for international use).
- These cards are can be used to withdraw money from ATM and for transferring money to bank accounts, credit cards, debit cards, prepaid cards within the country.
Prepaid Cards
- The usage of Prepaid cards depends on who has issued the card. It issued by banks/non-bank entities.
- For issuing a prepaid card, one has to pay the amount in advance for using the money whenever required. Therefore, this type of card is never linked to any bank account.
- The prepaid cards issued by banks can be used to withdraw money from ATM, purchase of goods and services at E-commerce (online purchase)/ Point of Sale (POS) and for domestic fund transfer from one person to another. This one known as open system prepaid cards. However, when it issued by authorized non-bank entities for the same usage it is known as semi-closed system prepaid cards. It can be used only domestically.
- One can store maximum Rs. 50,000/- at any point of time.
The Difference between Debit, Credit and Prepaid card.
| DEBIT CARD | CREDIT CARD | PREPAID CARD |
|---|---|---|
| In debit card when you purchase something, money is deducted from your bank account. | In credit card, the issuer puts money toward the transaction, which is a loan and have to pay back within time limit. | In prepaid card, one can withdraw up to the amount present in this card. |
| Application process is easy. | Application process is difficult, depending on one’s credit score and other details. | Application process is easy. Once you load your card with funds, you can start using it. |
| Debit card linked to bank account when issued by bank. | Credit card also linked to bank account. | Prepaid card is never linked to account. |
| Debit card only issued by bank. | Credit card can be issued by bank/ other entities approved by RBI. | Prepaid card can be issued by bank/non-bank. |
| Can store any amount (i.e. present in bank account. | Can store any amount (amount present in bank account + extra amount permitted to drawn). | At a time can store only up to Rs/- 50,000. |
| Can be used at ATMs. | Can be used at ATM to withdraw cash. | Cannot be used in ATMs. |
| One cannot withdraw extra money than available in his account in debit card. | If one withdraws extra amount one has to pay back the amount with the rate of interest. | Amount is paid in advance and no rate of interest is to be paid in prepaid card. |
