| CREDIT CARD |  |
- Credit cards essentially let you borrow money up to a certain
amount (your credit limit) from the card issuer to complete your
purchase.
- Credit cards also has the added benefit of installment
payments, that is, spreading payments to months or even years, not
to mention the bevy of deals and discounts to partner
merchants.
- Some credit cards offer rewards each time you spend.
- NOT ADVISABLE FOR PEOPLE WHO ARE PRONE TO SPENDING BEYOND
THEIR FINANCIAL LIMITS. DISCIPLINE IS ABSOLUTELY
NECESSARY.
| Depends on the approved credit limit assigned to you by the bank.
Increase in credit limits may be approved by the bank depending on
card user's credit history. | Allows you to ‘borrow’ money to be paid back at the end of the
card’s billing cycle |
- Annual fee (Most banks waive the first year annual fee.
Succeeding annual fees may also be waived upon request if user is
in good credit standing.
- Interest charged for unpaid balance and penalties for late
payments
| Can withdraw a portion of credit limit (charged with fee) | No maintaining balance |
|---|
| DEBIT CARD |  |
- Debit cards are the most straightforward of the three.
- Using a debit card to pay for a transaction simply deducts the
money directly from your bank account after your purchase.
- Funds in a bank account usually earns interest if a certain
balance is maintained.
| Depends on the amount you have in your bank account | Pulls the cash instantly from your bank account |
- No interest fees but might have overdraft fees
- Sometimes a dormancy fee is charged for accounts with no
customer-initiated transactions for a certain period of time.
- No ATM withdrawal fees if cash is withdrawn from own bank's
ATMs.
| Can withdraw from savings/checking account | Requires maintaining balance |
|---|
| PREPAID DEBIT CARD |  |
- Prepaid cards are not linked to any bank account.
- Instead, it has an electronic wallet that needs to be reloaded
once the balance is used up so that you may use it again for your
next purchase or withdrawal.
- Funds in a prepaid card does not earn interest.
- EFFECTIVE FOR THOSE WHO NEED TO CONTROL THEIR
SPENDING.
| Reloadable funds. Usual prepaid card limit in the Philippines is
P100,000.00 | Deducts corresponding amount of prepaid credits from your prepaid
balance/load |
- Most prepaid cards have card fees, some have annual fees.
- No interest fees
- Sometimes a dormancy fee is charged for cards with no
customer-initiated transactions for a certain period of time.
- Most prepaid cards have an ATM withdrawal fee.
| Some prepaid cards cannot be used in an ATM | No maintaining balance |
|---|
| PREPAID CREDIT CARD (or better known as SECURED CREDIT CARD) |  |
- Exactly like a credit card but will need a collateral in form
of bank deposits which cannot be withdrawn by the cardholder until
he relinquishes ownership of the credit card.
- The deposited amount will also serve as guarantee in case
cardholder fails to pay the monthly dues and card becomes overdue.
This will allow the bank to withdraw any amount due from the
collateral deposit account to pay for any amount due.
- However, approval of application is still not 100%
guaranteed and will be under the discretion of the bank.
| An amount which is usually less than the collateral deposit. | Same as credit card | Same as credit cards. | Same as credit cards. | Requires a certain amount of deposit which is higher than the
credit limit as collateral. |
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