Bank cards: what are their types and how do we use them?

Bank cards have become a major part of our modern lives. We buy, sell, pay our bills, shop for our goods and book our plane tickets and hotels through these cards, which has become a practical alternative to carrying liquid money.

It is considered a very popular means of payment in different countries of the world. It is multi-use and has many advantages over other options like cash. It is a real alternative to carrying money and the risks that come with it. But if misused it can become a curse. Therefore, one must be careful in how it is used. This must be dealt with.

There are a variety of bank cards currently available to meet the needs and preferences of different consumers, and they differ from each other when it comes to how, when and where they can be used.

In this report, we will focus on the most common types of cards globally, which are: credit cards, debit cards, prepaid cards, virtual cards and gift cards, enumerating the advantages and disadvantages of each based on several specialized sites . And platforms such as: “Forbes” and “Forbes.” BNC Bank, N2F, Banco Piablo, Finedo, and others.

Credit Card

It is one of the most popular and convenient payment methods worldwide, and has become an integral part of modern finance, providing convenience and flexibility to consumers around the world.

A man uses an ATM machine at a bank in Baghdad on March 4, 2012.  A lack of efficient banking is holding the country back as it rebuilds its economy after Saddam Hussein's years of underinvestment and the turmoil that followed the 2003 US-led invasion.  ,  Without banks integrated into the global financial system, foreign investors from outside the oil sector will remain hesitant to commit large sums of money to Iraq.  Image taken on 4 March 2012.  Feature Iraq-Banking/Reuters/Mohammed Amin (Iraq - Tags: Business)
Credit card payments market size to reach $644.4 billion in 2023 (Reuters)

The global credit card payments market size is expected to reach $644.4 billion in 2023. IMARC Group expects the market to reach $1,200.6 billion by 2032, with a compound annual growth rate of 7% during the period 2024-2032.

The market is witnessing steady growth due to increasing preferences for online shopping, which offers convenience and flexibility in payment methods, and advancements in payment processing technology to enable faster, secure and convenient payments.

With this type of card you do not need to keep money in your bank account to make purchases. Every time you make a payment, the amount you spent will be deducted until you reach your credit limit, and you will then have to repay the amount to the bank, usually in installments and with interest.

It also enables you to shop online and in stores, pay bills, and even withdraw cash from ATMs (be careful, this is a risky process with high interest and fees).

Credit cards help in improving credit history and provide effective protection against fraud and theft. It also offers an opportunity to earn points and discounts while shopping.

But this increases the chances of accumulating debt with high fees and interest. Late payments can result in higher interest payments, making timely repayment important.

Despite the benefits of credit cards, individuals must be careful to avoid accumulating debt and pay dues on time.

Debit Card

This card differs from its predecessor in that it is directly linked to your deposited bank balance, as it requires the presence of funds in your bank account to make purchases, and if your balance is empty, This card will not work, and this means that by the platform's definition, you can only spend or withdraw money you already have. “Capital One”.

ISTANBUL, TURKEY - DECEMBER 01: People use Turkish bank ATM machines on December 1, 2017 in Istanbul, Turkey.  The trial of Mr Reza Zarrab, an Iranian-Turk who ran a foreign exchange and gold dealership, continues in New York.  In recent days of testimony, Mr. Zarrab has implicated several Turkish banks as well as high-ranking government officials.  Mr. Zarrab is accused of managing a billion-dollar scheme to smuggle gold for Iranian oil and conspiring to violate the United States
Debit cards have no interest on purchases and the ability to prevent debt accumulation (Getty)

You can use your debit card to make purchases online and in stores, pay bills, and withdraw and deposit money into your bank account through ATMs.

The advantages of debit cards are low or no withdrawal fees, no interest on purchases, and the ability to prevent debt accumulation since withdrawals can only be made from actual account balance. However, it comes with limited funds available and does not contribute to building a personal credit history.

prepaid cards

This type of card is usually used by people who do not want to use their credit or debit cards for online purchases due to concerns about their financial security.

A prepaid card is issued by a financial institution, and you load it with money, and you can set a high limit on it. Once the financial balance on the card is exhausted, it stops working, and you must refill the balance to return to work.

This type has a card number and expiration date, just like a debit or credit card, but it is not linked to a bank account. You can refill the prepaid card and use it until it runs out.

The paid card can be used to make purchases online or in shops and stores (where accepted), pay bills and withdraw and add cash.

الموسوعة - epa01357062 An Iraqi customer uses a cash machine at a public market in central Baghdad, Iraq, 25 May 2008.  Iraqi banks adopted cash machines (ATMs) on the streets and in public markets for the first time following the destabilization of security in Baghdad.  EPA/Faleh Kheiber
Prepaid card issued by a financial institution that replenishes funds with a maximum limit (European)

A prepaid card offers many advantages, as it prevents the possibility of excessive spending and debt accumulation, and is easily used without the need for a bank account. Moreover, it can also be recharged for continuous benefits. However, it has some drawbacks, including fees for purchases and withdrawals, and it may not be accepted in some stores.

virtual card

A non-physical payment instrument that replaces physical cards and cash, it is virtual which means you cannot carry it in your pocket or in your wallet among other cards, and it is virtually just a 16-digit card number. Exists as a set of data including. Expiry date and verification code.

You can get a virtual card from any financial issuer, such as a bank or some financial institutions over the Internet.

Some virtual cards are reusable, but some issuers offer temporary cards that may be disposable, or used only once.

You can store the Virtual Card on a device such as a mobile phone or smart watch, and you can use it for contactless payments in stores or online, but you cannot withdraw money using the Virtual Card.

It also offers a high level of security, as the actual account details are hidden, which is one of the main motivations for subscribing to this service. These can be easily added to your digital wallet like Apple Pay or Google Pay and are immediately ready to use upon release, usually with no fees involved. However, it has some drawbacks, as it can only be used in stores via digital wallets, and it is temporary, making it unsuitable for recurring payments or direct debits.

gift card

Like prepaid cards, gift cards also come pre-loaded with funds. What makes it different is that once you spend money on it it is no longer in service, you cannot reload the gift card or refill it with new money.

cash gift
Gift cards come with positive features like controlled spending and security (Shutterstock)

Gift cards were initially locked and designated for use in specific stores, and could not be used outside the designated location. The situation is different now, as gift cards are issued that can be used anywhere, and are known as “open-loop”.

You can use the gift card to make purchases at retail stores, gas stations, restaurants and convenience stores that accept it.

They come with positive features such as controlled spending and security, as they usually contain small amounts of cash and cannot be reused. It comes without the need for a bank account. However, there are some drawbacks, as the scope of use is limited and requires payment of issuance fees. Use may also be subject to special terms and fees that depend on merchant policies.

Finally, after knowing the advantages and disadvantages of each type of card, you can now choose the appropriate type of card, and in all cases you have to deal with it carefully in such a way that its positives are maximized and its negatives and risks are minimized. Be less than. Your life, your way of life and your money.

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