Types Of Bank Cards: Credit, Debit, Prepaid, Types, Limits, Pros & Cons

Table Of Contents

  • What are bank cards?
  • Uses of bank cards.
  • Types of bank cards.
  • Credit cards (types, limits, pros & cons)
  • Debit cards ( types, limits, pros & cons)
  • Prepaid cards ( types, limits, pros & cons)
  • Conclusion.

What are bank cards?

Bank cards are electronic devices issued by the bank to every customer to perform one or more services. They could be used to make purchases, withdrawals and transfer of cash. It is a personalized card that has the name of the user and a unique number printed on it which enables various electronic devices to read and access the information of the card user.

Uses of bank cards

  • Allows you make purchases or withdrawals easily with little or no stress.
  • It makes transactions easier and convenient.
  • It saves you the stress of carrying cash around which guarantees a certain level of security.

Types of bank cards

Every bank card type has its own uses and purpose it serves. There are various classifications of bank cards but the ones used in the banking sectors are credit cards, debit cards and prepaid cards.

  1. Credit Cards: They are cards issued by the bank or other financial institutions that are used to purchase items or pay for services on credit. It offers you a line of credit that can be used to perform one or more services and allows you pay back the amount at a later date.
  2. Debit Cards: Debit cards is a payment card issued to the owner of an account by the bank that allows the person make purchases and pay for other transactions instead of using cash. Once the debit card is used through an electronic device, the amount spent is usually deducted from the owners available bank balance.
  3. Prepaid Cards: It can also be referred to as a store-valued card. This card works in such a way that you can only spend the money loaded on the card. It allows you load your desired amount of money on it and spend it till its exhausted.

Credit Cards

A credit card is credit facility card issued by a bank or a financial institution that enables the owner of the card to borrow funds and pay back at a set date. Credit cards can be used for easy and convenient transactions. This payment card is much more secure as it is not linked to your bank account like a debit card. The credit limit of this payment card is determined by your credit history and income. A certain percentage of interest is charged when you use a credit card.

Types of credit cards

The various types of credit cards allows you the opportunity to choose which type of credit card suits you. Credit cards varies based on their credit limits and uses.

  1. Reward credit cards: This type of card allows you earn rewards based on your spending habits or the amount spent. It offers you rewards like cash back and other points that can be deducted from your purchase balance whenever you make a purchase or they can be used for other purposes.
  2. Cash back credit cards: It offers a percentage of cash on every purchases you make. The more you use your cash back credit card, the more you get a certain percentage on what you spend.
  3. Travel credit cards: Using a travel credit card allows you earn points you can redeem and use for plane bookings, dining or hotel bookings. They are specifically used for travels i.e the points earned on money spent can be used for travel related purposes.
  4. Starter credit cards: These credit cards are used by people with little or no credit history and are willing to build their credit history. They offer you the access to a credit system that helps you build a credit score. The various options within the starter credit card are the secured credit card, unsecured credit card and the student credit card.
  5. Business credit cards: A business credit card are specially designed for business owners rather than for an individuals’ personal use. It could be used by small or large businesses to build their credit score and profile.
  6. Co-branded credit cards: Co-branded cards are owned by a company or store in partnership with a bank or other financial institutions to offer credit cards with their business name which are now issued to individuals who use that brand so they are allowed to earn rewards every time the card is used.

Limit of a credit card

A credit card limit is the maximum amount of money you can spend when using a credit card, when you exceed the limit of that credit card you can no longer make purchases. The credit card limit can be set or determined by your spending habit, credit score, income and sometimes by the limits on your other credit cards. It is necessary to avoid spending over your credit limit as it reduces your chance of future borrowing and an increase in interest rate.


  • It solves the problem of carrying cash around.
  • It helps build a strong credit history and score.
  • It enables rewards earning which can be used whenever they are needed.
  • It ensures your spending habits are tracked and helps you build an healthy spending habit.
  • They provide you some form of protection as the card is not directly linked to your bank account.


  • Access to credit can lead to excessive spending which results to debt.
  • Interest rates are charged if you carry a purchase balances from one month to another.
  • It could have an effect on your credit history and profile if you spend above your limit.

Debit Cards

A debit card is issued to a bank account owner, where the card is used in place of cash to make transactions whenever and wherever. It deducts money directly from the account of the cardholder whenever a transaction is made.it allows you pay for goods or services even in the convenience of your home. The debit card can also be used for card withdrawals.

Types of debit cards

The type of debit cards varies according to different countries. There are some debit cards you can use in your country that you cannot use in another country. The different types of debit cards are:

  • Mastercard debit card: This type of debit card are provided by Mastercard Inc. It uses the Mastercard network to process transactions. The money spent is deducted from the card owner account as at the time the transaction took place.
  • Visa debit card: The Visa debit card uses the Visa network to process transaction. This payment debit card is issued to a bank account owner and allows individuals carry out transactions and withdraw cash using the card. It can be used for both online and offline purchases.
  • Maestro Debit card: This brand of debit card is owned by Mastercard and was introduces in 1991. The debit card is used to make purchases and withdraw cash at the ATMs. They are linked to the account of the cardholder and the amount spent is deducted immediately.
  • Platinum debit card: This card does not only make spending convenient and faster, it also allows you earn rewards as you spend. With a platinum debit card you can earn rewards on every transaction such as spending on travelling, entertainment and payment of utility bills.

Limits of a debit card

The transaction on a debit card is limited and based on the available book balance and it varies depending on the card type and it daily limits. You might have a sufficient funds in your bank account but once you exceed the card daily limit your transaction would be declined. A debit card limit helps you control your excessive spending habit and also reduce the risk of all your money being wiped out when your card is stolen.


  • It makes it easy and convenient to pay for purchases either online or offline.
  • They are used as ATM cards which enables you to withdraw cash.
  • No interest rate is charged when you use a debit card.
  • It prevents debts as you cannot spend above your available balance.


  • It doesn’t offer a credit line i.e you cannot purchase a product on credit and promise to pay at a later date.
  • High rate of fraud once your card is stolen.
  • Overdraft fees would be charged if and when you spend more than what is available in your account balance.
  • A bad bank network affects the transaction process.

Prepaid Cards

Prepaid cards are cards bought with money loaded on it. A prepaid card is not linked to the bank account of the cardholder. It allows you spend the money loaded on the card and once the balance is exhausted you can reload the card and use it again. They are used to make purchases and pay bills depending on the amount loaded on the card.

Types of prepaid cards

  • Open-loop prepaid card: An open-loop card can be used at any store that accepts and recognizes the card as a means of payment. They can be used for payments any day and anytime. There is always a branded card network logo on it for example a Mastercard logo which makes the card recognized and accepted.
  • Close-loop prepaid card: This type of prepaid card can only be used as designated stores and places. They do not have any card network logo branded on it so it might not be accepted at every stores.
  • Reloadable prepaid card: This card allows you add money to a card and once it is exhausted it can be reloaded again for further use to make payments for goods or services.
  • Non-reloadable prepaid card: Unlike the reloadable prepaid card this is a use once card and once it is exhausted it cannot be reloaded for further use.

Limit of a prepaid card

There are limits on the prepaid card depending on the issuer of the prepaid card. The limit varies depending on the financial institution giving out the card.


  • It reduces the risk of overspending.
  • It is safe and easy to use.
  • It prevents debts.
  • It allows you buy and pay for purchases without a bank account.


  • It doesn’t give you the opportunity to buy and pay later like credit cards.
  • The funds available on the card are limited.
  • Prepaid cards doesn’t allow you earn rewards.
  • Loss of deposited funds as a result of failure to use them.


Having a detailed knowledge about the various bank cards influence your decision in choosing the bank card that suits your financial need.

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