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Ever since the digitisation of baking systems, financial institutions in the UAE have revolutionised their products to accommodate the ever evolving customer needs. The banks provide debit, credit, and prepaid cards to make funds easily accessible to their customers. Each type of card delivers its own features and benefits and depending on the financial requirements, a customer can opt for a debit, credit, or a prepaid card. While credit card offers short term loan, a prepaid card prompts you to use your own money. Additionally, a prepaid card is not linked to your bank account, as it is in the case of a debit or credit card.
A prepaid credit card allows you to spend the amounts stored on the card. It works like a debit card and is sometimes also referred to as a prepaid debit card. These cards are not linked to your bank account, unlike a debit card and, you need to reload your card online or at an ATM, CCDM to continue using it once the funds are depleted. Your cards can also be reloaded at participating merchants and stores.
The bank issue prepaid cards along with the branding of major payment channels such as Visa, Mastercard, American Express and more. These cards have very lenient criteria and do not affect your credit score or history.
Prepaid cards make it convenient for you to shop without carrying wads of cash and enjoy the security of digital payment. However, the card issuer may charge you a monthly fee, reloading and card set up charges before you can use it.
Along with offering a secure payment method, the prepaid card comes with several advantages as mentioned below.
A credit card enables you to acquire quick loans from banks and financial institutions with a promise to repay within the prescribed time. If you cannot pay the borrowing at once, you can also convert them into monthly instalments along with an interest rate. With a credit card, you can shop online and offline, pay utility bills, earn rewards on expenses and more. Unlike a prepaid card, where you need to reload funds, a credit card offers you the money from the bank with almost no liabilities. For this reason, credit cards are one of the safest financial tools available in UAE. Most financial institutions offer a variety of credit cards in UAE suiting your needs.
Along with secure shopping, credit cards offer a range of benefits including, travel, dining, lifestyle and entertainment privileges. However, the eligibility criteria for a credit card may be constrained based on an individual’s salary and other requirements, making it tougher to acquire in comparison to a prepaid credit card.
Being one of the most preferred financial tools, credit cards in UAE come with multiple benefits. As a credit cardholder, you can enjoy the following advantages.
Following are the key differences between a credit card and a prepaid card in UAE.
Choosing the right type of card is crucial in planning and managing your expenses. You need to consider several factors while selecting between a credit card and a prepaid card. If you are an aggressive shopper, a credit card may land you into debt and large repayment amounts. On the other hand, a prepaid card may not offer adequate benefits while including numerous charges. You need to take the following factors into account when choosing a credit or prepaid card.
Prepaid cards offer safe payment options along with keeping expenses within limits. It is a feasible choice for individuals with low credit scores, who cannot opt for a credit card. Frequent shoppers should also rely on prepaid cards since they might end up spending more with a credit card. Since prepaid cards don’t link to any bank account, low salaried individuals can also acquire a prepaid card and enjoy digital payments with safety and security.
|Difference Between a Prepaid Card, a Debit Card and a Credit Card|
Prepaid cards and credit cards offer different kinds of features and benefits. Depending on spending habits and card use, you should select a card. To have a risk and debt-free financial experience, you should acquire a prepaid card. If you have a good command over your spending habits, a credit card can prove to be beneficial. Considering the factors mentioned in the article, you can choose between a prepaid or a credit card that suits your needs.