One of the most difficult tasks to do is to compare one product from another. Maintaining objectivity is something that is not easy to do, especially if you are a user of one of the products that you would have to compare. Comparison on the use of prepaid cards, debit cards, and gift cards is no different. But I’d rather break a leg than not be able to tell you the pros and cons of these emerging payment methods.
Nothing bad can be said about prepaid cards when it comes to the consequences of misusing them. If you haven’t loaded money into your prepaid account, then you can’t use it. The way it works is not for everyone though because as mentioned, it requires you to put cash on it so you get to use it typically anywhere a credit or debit card is accepted.
This kind of card is ideal for youngsters who can’t have their own credit cards yet and would already want to practice money management (or how to tirelessly spend money!). This kind of card is also ideal for spending online. Another good thing about it is that it does not require a credit check to get one so a faulty credit history won’t have its way against you on this.
A debit card, on the other hand, has its own pros and cons. It works almost the same as a prepaid card; the only difference is that money is deducted directly from your checking account. However, unlike a prepaid card, it is not ideal for online spending. I have heard most people say that it is even better to use a credit card than a debit card when dealing with online transactions. Some banks also charge for each use of this card. Finally, retailers treat debit card transactions the way they do cash transactions so returns on purchases can be a bit tricky.
Another payment method, the gift card, sounds like heaven. This is often used by those who are not very particular with personalized gifts, like a clichéd she-might-not-like-my-gift-anyway thing. In cases like this, a gift card is available. A gift card giver is happy to give and the recipient is as happy to receive but there are things they may need to know about the card first before they can be all smiles.
The giver for one would have to be ready to face service fees. And the recipient might not be as happy to find out that the joy of gift card is not long lived as monthly maintenance charges and other fees may apply upon its use.