Confused about money cards? Read this

Posted at Mar 09 2014 09:11 AM | Updated as of Mar 11 2014 01:16 AM

MANILA, Philippines - Admit it, it felt good the first time your parents gave you that shiny plastic card that lets a machine spew out crisp brand-new cash.

The ATM card has since been the most common money medium you've ever known.

But did you know that an ATM card can be in the form of a cash card, debit card or a credit card?

An ATM card, also known as a bank card, money card, or payment card, is any plastic card provided by a financial institution for consumers’ use in Automated Teller Machines for more convenient banking transactions.

Consumers’ spending behavior and the advancements in banking and commerce have brought about hundreds of different financial products in the market today. These products enable us to do multiple financial activities such as online payments, fast cash withdrawals and fund transfers, among others.

Three of the most common money cards used by Filipinos are the cash card, debit card and the credit card. How can we really distinguish one from another?

Cash Card

A cash card is any card that lets the user transact with the card's available balance. It is prepaid and reloadable and is best for payments and remittances. More often than not, it stands on its own without you needing to apply for a savings or current deposit account in a banking institution.

Just recently, money remittance companies launched the use of cash cards for faster and more convenient fund transfers. LBC, for one, partnered with RCBC to offer the LBC Send and Swipe Card. It can be used for online payments, grocery shopping or through any VISA ATMs worldwide. On the other hand, some banks and money remittance companies offer products that are more customized for a particular purpose. For instance, the BPI ePrepaid was designed especially for online payments and in-store shopping, but it cannot be used on ATMs.

Debit Card

More and more companies partner with banks to offer debit cards to its employees for payroll transfers. It is because a debit card functions the same way like a cash card, but it is linked to a specific savings or current deposit account.

In a debit card, the amount of the purchase is debited from the available balance the same day the purchase was made. There are cases, however, that it takes several banking days for the debit to be reflected on the account. Similar with the functions of a cash card, a debit card also allows you to withdraw cash from ATMs and pay online or in physical stores. Debit cards are becoming more popular among Filipinos because you can only spend the money you have, unlike with credit cards that you have a certain credit limit.

Credit Card

What’s good with a credit card, though, is that it is an instant access to money, subject to your credit limit assigned by the issuing bank. It also has the same features as the cash card and the debit card. The only difference is that every transaction is on credit or “utang” in Filipino. It has annual fees, interest rates and late charges that are added on top of your spending. Hence, a credit card is best for people with regular income.

Last year, there were around 7.5 million Filipino credit card holders.

For an overview of this comparison, we prepared an infographic to let you know what card is best for your needs.

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