Debit vs Credit Card vs Prepaid Credit Card

Debit vs Credit Card vs Prepaid Credit Card
The advancement of technology has made it possible to make financial transactions without actually having to hand over physical cash.

Electronic payment cards have revolutionized how people spend in the current day and age. Card-based sales are faster, with transactions being completed just by swiping the cards.

Also, with the rise of online shopping, card-based operations are now becoming the standard way for people to spend.

There are three main types of cards that you can use for electronic payments, namely; credit card, debit card, and prepaid credit card. Your choice of card will depend on how you are going to use them.

Here is a breakdown of the three types of cards.

Debit card

Debit cards are the most straightforward card to understand. When you have a savings account at a bank, you can request your bank for a Debit card. Most banks in Australia already give out debit cards connected to your bank accounts.

Whenever you use your debit card for a transaction, the amount you paid for is deducted directly from your savings account. Debit cards also function as your account's ATM cards, which enable you to withdraw cash from your account using machines compatible with your debit card.

Credit card

Credit cards allow you to borrow money up to your credit limit, which is set by the card issuer for you to complete your financial transaction. Credit cards allow you the benefit of paying in installment terms ranging from a month up to sixty months.

The total price of your purchase will be spread evenly across your payment terms. However, credit card companies charge you with interest on your purchase. They will charge you with additional penalties for delayed payments.

Prepaid credit card

Prepaid credit cards allow you to complete transactions just like you would on a credit or debit card. However, prepaid cards are not linked to any bank account; instead, you have to load money on the card.

You can only purchase within the amount of balance you have on your prepaid credit card. Once the balance has been consumed, you will need to reload your card so you can use it again.

So which one will you choose? Here are some features of the three cards that can further help you in your decision.

Spending limit

If you want to control how much you spend, then a debit card or a prepaid credit card is right for you since you are spending the money that you already have.

However, when you use a credit card, your spending limit depends on the credit limit determined for you by the card issuer based on your credit rating. Using credit cards may allow you to purchase items even if you have no money yet.


When you use your debit or prepaid credit card, you do not have to worry about payments. That's because you have instantly paid for the item, and it will be reflected in your bank account or balance.

However, with a credit card, you need to pay for the item entirely or in installments at the end of the card's billing cycle.