What is the difference between a debit card and a prepaid card?

It seems that technology does not like cash, as time goes by we start to see new ways to pay without having to use printed money. A relatively common measure, which we all know, is the debit cardswhich allow you to carry out financial operations even from your cell phone.

With the recent boost from digital market, which not only includes buying and selling but also banking itself, some brands have decided to launch a product similar to a debit card. Called prepaid cardswe tell you all the details.

What is a prepaid card?

It is an alternative bank card that emerged by demand from the digital world. It is more practical and secure than debit cards as a method of payment by Internet; their cost is usually low and some are even disposable after the first top-up, which means less risk of fraud. As if that were not enough, the requirements to get it are minimal, nothing more than buying it.

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What differences does a prepaid card have with a debit card?

It could be said that prepaid cards are a debit card, but nothing more in the strict sense that you can only spend the money that you have previously deposited, and that you have available at that moment.

For the rest, its highest deposit ranges barely reach just over 19 thousand pesos per month, well below what some debit cards reach; the places where you can use it are much less than where you could use your normal debit card, because most of the prepaid ones do not have the stamp of Visa neither master card.

Prepaid cards are valued more for being practical in the short term than for offering lasting confidence. They will not give you a return according to your balance on the card, that is, it is not the right one if you are thinking of saving or investing, services that, on the other hand, a debit card does offer.

Lastly, and most importantly, most prepaid plastic brands do not have the financial backing of a bank, let alone the savings insurance backed by the Institute for the Protection of Bank Savings (IPAB). The latter means that if the company that provides the service goes bankrupt, no body will compensate for the loss of your money.

We suggest you read: Is it better to use a debit or credit card for online purchases?

Is a debit card or a prepaid card better?

It depends on what purpose you have. As we mentioned before, a prepaid card is practical and easy to use in the short term; in some cases it is safer than a debit card; and it can be added that it is less common to be charged commissions for using it.

The prepaid is a good choice to complement your portfolio, for example, you can use it to manage your money by limiting expenses, or to shop online more safely. But if you’re looking for the confidence of an account to manage your personal finances, you might be better off going with a debit card.

For more information on this and other topics, visit our Credits section.

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