In the Philippines, there are three main types of financial cards to choose from. These three have their own positives and negatives. Choosing between the three is a matter of personal priorities.
Needless to say, most people choose to go for credit cards in the Philippines, however, there are still those that use debit cards and prepaid cards.
Either way, here’s a short discussion on the three cards, as well as their features and typical uses.
A debit card is basically a card that gives you access to your savings account. You can use it to directly access your savings account and use that to pay for your purchases. Most debit cards have no fees except for overdraft fees (payment for when a purchase exceeds the amount you have on your debit card). You can withdraw cash from your savings account using your debit card. However, it needs a maintaining balance in order to stay open.
The maintaining balance would usually be around PHP2,000 to PHP5,000. You’ll be notified that you’re account is in a critical state once it reaches the maintaining balance.
The least popular of the three, a prepaid card is a card that you load money into. You can liken this to virtual cards such as Paymaya and Gcash. You load them up with money, then use it like any other credit or debit card. It has no fees, whatsoever, but it cannot be used to withdraw money from ATMs. They also have no maintaining balance. That being said, once you load the money, there’s little to no way to get the money back except to use them to pay for something.
Lastly, the credit card, as it has already been mentioned in this article, lets you borrow a certain amount of money from the bank—depending on your credit limit. You can use it to buy almost anything as long as you pay your monthly dues. When you have unpaid balances, you are charged an interest, as well as a few fees, when you don’t use your credit card responsibly. You can use it to withdraw cash, but it’s also charged with a fee.
In summary, the cards can be classified based on when you will pay the amount. With prepaid cards, you have to pay before you even make the purchase because you have to load them up. You pay at the exact moment you buy with debit cards because it takes the money straight from your savings. Lastly, with credit cards, all of the payments are done after the transaction, giving you more time to earn, and leeway to collect enough money.
Aside from that, debit and prepaid cards don’t have a lot of flexibility when it comes to payment options and are usually constrained to how much you have at the moment. Meanwhile with credit cards, you are provided with different payment plans—one of the most popular ones are installment plans. This lets you buy items that are expensive, and lets it be paid for within months or even years.
Another important note is that some credit cards have reward systems that provide exclusive items to avid cardholders.
For prepaid and debit cards, yes, they’re limited to your money at the moment, but they’re also great for people who want to be strict with their budget. Credit cards, on the other hand, give you a little bit too much freedom when it comes to credit, they lend you (as long as you stay below their credit limit, that is).
At the end of the day, getting a credit card, debit card, or prepaid card depends largely on the card holder. For most people, credit cards are the optimal choice, while others who want to spend less, go for the debit and prepaid cards.