Wallets are getting slimmer and slimmer since most people no longer put wads of cash in them. People find it easier to carry credit cards in their wallets since they are lighter and more secure to have than a lot of money. There are three basic types of cards that people use for financial transactions, namely credit cards, debit cards, and Visa gift cards. Each card has its pros and cons. It would help if you learned when to use the different cards so that you can manage your money effectively.
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Credit cards
A credit card allows you to purchase items with borrowed money from the card issuer. You can buy items up to the credit limit set by the card issuer. However, credit card companies charge interest rates on the remaining balance and processing fees for each financial transaction. When using a credit card, it is best if you pay your dues on time to avoid getting late payment penalties.
Most credit cards that are connected to major networks such as Visa and MasterCard are accepted internationally. They are handy when traveling overseas since you can use them to pay for hotels, restaurants, etc. without converting your money into your destination country’s currency. The credit card issuer will automatically do the conversion for you.
Debit cards
Debit cards are linked to your bank account. With a debit card, your spending limit will be based on how much money you have saved up. Using a debit card for financial transactions is a safer way to avoid overspending since you can only spend within your balance. However, some banks may allow you to purchase beyond your account balance but will charge you with overdraft penalties. Debit cards do not have interest fees. However, banks may require you to have a maintaining balance in your account to keep on using the debit cards.
Prepaid Visa gift cards
A prepaid Visa gift card is a form of debit card such that you can also use it to purchase items and pay for services. However, unlike a debit card, the prepaid gift card is not linked to a bank account. Instead, you have to load money to the card. You can only spend up to the amount that you have charged.
There are visa gift cards that are for single use only. Once the initial cash load is consumed, the card will be useless. This type of Visa gift card is usually meant as a corporate gift item for loyal customers. On the other hand, there are Visa gift cards that are reloadable. A reloadable gift card is usually given by companies to their employees for discretionary use.
Among the three types of cards, the debit and Visa gift cards are the safer cards to use when you are struggling financially or have trouble paying bills on time. Both types of cards do not have interest fees, and you can easily manage your finances because it is impossible for you to overspend. However, when you are planning on a significant purchase, a credit card will be a more practical option since you can pay for the item in installments. Credit cards are also associated with significant merchandizers and stores which give out discounted rates when you use a specific brand of credit cards.
Be wise with how you manage your money. Always remember that each type of card, even a Visa gift card, has its advantages and disadvantages, so review the terms and conditions carefully in using the cards.
