Types of Payment Cards

Transactional cards have become very popular amongst everyone these days, due to its convenient and simple nature. Payment cards eliminate the need to carry much cash around with you, as it can be a huge risk. However, there are multiple types of payment cards available, depending on your need and requirements. If you are pursuing any government jobs in banks, then knowing about all this will serve you well.

Types of Payment Cards

Credit card

Making financial transactions with a credit card is one of the simplest ways of spending money. When you have a credit card, you can spend whenever you want and you will not have to rely on cash for financial transactions. However, keep in mind that every credit card comes with a transactional limit and if you try to spend more than that, your card will stop working. If you pay your credit card dues before the deadline, your bank might increase the amount of your credit card limit. Another thing that you should keep in mind is that of the interest charges, as every credit card levies a specific amount of money as interest. You will have to pay your credit card bill along with this interest. The faster you pay your dues, the less interest you will have to pay.

Debit card

Unlike a credit card, debit cards allow you to transfer money from one account to another. Apart from this, debit cards have other functions also. You can use your debit card to withdraw money from ATMs and you can use your card to shop at stores whenever you want. Almost all debit cards have an overdraft limit, which provides you with the convenience of checking your current balance, which is limited to a specific amount. Some banks are introducing contactless debit cards, where you will not have to provide any PIN number. However, this is only possible if your purchase falls under a specific amount.

Prepaid card

Prepaid cards are issued by both banks and non-banks, allowing cardholders to load a predetermined value onto the card in advance, which is then stored in the form of cards or wallets. The nature of prepaid cards, whether open or semi-closed, and their functionality, including cash withdrawals from ATMs, purchasing goods and services at PoS terminals/e-commerce, and domestic fund transfers within prescribed limits and conditions, depend on the issuer. While banks issue open system prepaid cards, both banks and non-bank entities can issue semi-closed system prepaid cards.

Electronic card

Electronic cards, akin to debit cards, are issued in specific overdraft accounts, resembling personal loans without specific end-use limitations. Banks have been authorized to provide electronic cards to individuals with overdraft accounts, facilitating domestic digital transactions. It’s important to note that, for aspects such as security, safety, Merchant Discount Rate (MDR), and Additional Factor of Authentication (AFA), the regulations and guidelines applicable to debit cards also extend to these electronic cards.

Conclusion

Payment cards can serve you many benefits, and these can help you in your daily life. Apart from this, having a clear idea about the different cards will make it easier when it comes to your competitive exam preparation.