What Is the Difference Between a Prepay Card and a Credit Card?

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That is one particular questions that some shoppers might not exactly sometimes be able to answer, even if they have got used both kinds of card. This could especially be true since the prepaid and bank cards may look very similar and they are both user friendly. Simply punch inside your Flag each time you want to make a withdrawal or purchase.

However, having a prepay card you should only spend the amount of money that you have preloaded around the card. And that means you cannot amass debt. With a credit card, each time you invest in it, you happen to be borrowing money, which, if you don’t pay it back when your monthly statement arrives, you may be charged interest on.

Where can they provide?

Both types of cards may bear a product (eg the MasterCard symbol), which may mean that these are widely accepted wherever the logo is displayed. Indeed, both varieties of plastic may typically be used to:

withdraw cash from an ATM in england;
withdraw cash from an ATM overseas;
purchase goods and services on the web and on the phone;
make purchases in stores, restaurants, garages etc; and
spend on bills.
What are the opposite differences?

So far, the cards may seem similar. One of many differences, then, could possibly be in who is able to obtain a bank card or prepaid card, and just how much each one may cost you.

The central difference here is that, as discussed above, charge cards are techniques of borrowing money coming from a bank or card provider. Pre-pay credit cards on the other hand only involve extra cash that you simply yourself have loaded on the card. There is absolutely no borrowing associated with a prepaid card.

Hence the attitudes with the card issuers could possibly be different. As a prepaid credit card user, you are merely spending cash which you have already put on upfront. Being a user of an charge card, you happen to be income that you’ve not really paid the cardboard company. Accordingly this presents a danger on the card company that you could not be able to pay the money back.

Obtaining cards

Considering that there’s no risk involved with a prepaid credit card issuer (while not borrowing money from their store), there exists typically no credit check needed to pass through to be able to be eligible for one. However, non prepaid card providers may insist that you simply pass a credit assessment with flying colours so that they can incorporate some confidence that you are likely to be able to afford to repay the sum you have borrowed.

Charging methods

Finally, another significant difference between the 2 varieties of card will be the procedure by which you might be charged for making use of them. Users of pre-pay credit cards may typically pay fees for performing particular activities, like topping up and making withdrawals. With pre-pay credit cards such charges are transparent.

With credit cards on the other hand, a persons vision which is charged may continue for months and months (and maybe even years) if you have not managed to repay it quickly, making the purchases which you have made to them potentially very costly indeed!

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