Choosing a credit or prepaid card?

Choosing a credit or prepaid card? Although there is a significant number of users who voluntarily choose to use cash payments or other alternative forms of payment, the truth is that cards, plastic money, continue to occupy a fundamental place in our way of understanding economic transactions.

However, sometimes it is necessary to reflect a little on how we use these products, for example when we question whether it is better to use a credit card or a prepaid card.

The credit cards, to which we are more accustomed, do not need much explanation, it is a product that offers us the possibility of making advance payments against the card itself, which in this way to see reduced the credit it has and, subsequently, within a certain period (usually has monthly maturity) we will have to return what has been disposed plus the costs or interest that have been generated.

The prepaid card, which should not be confused with the debit card, is a relatively new product, in which the axis of operation is very simple, the money not expressly recharged on the card is not available, and therefore, we are limited exclusively to consume what we have loaded not being able to access more funds in any of the cases.

Credit vs Prepaid

For this confrontation to be realistic, we must place ourselves in a scenario in which the user has the same conditions for both products. Based on this assumption, what we need to elucidate is which option is more interesting for our pocket and, in general, for our domestic economy.

In favor of the credit card is obviously the fact of the possibility of deferment of payment as a fundamental axis of its benefits. However, these benefits have a certain catch: usually exceeding certain limits, very short in the vast majority of cards, the costs and surcharges for the deferment of payment are high, not to mention what may involve the delay in the payment of an installment of the credit card, which will greatly increase the costs of what has been arranged.

In the case of the prepaid card, the main advantage lies in the possibility of controlling spending. In this case if we are able to rationally manage our accounts, we can adjust the spending limits on purchases and thus not succumb to extraordinary expenses or uncontrolled cost overruns, something that happens too often when we have credit that does not immediately affect our pocket. On the other hand, the main virtue of this product is also its main defect, once the money loaded is exhausted, it will not be possible to use the product in any way unless we recharge it, so it may not become one of those products that we use in case of need as if it can happen with the credit card.

And combining both options?

Well, this is probably the most optimal outcome of the confrontation. In fact, it seems increasingly clear that the two card models are not opposites, but complementary. Being able to control spending through a prepaid card is a very intelligent option when we try to adjust our domestic economy, but, at the same time, having a credit card to be used rationally for occasional expenses, cost overruns or unexpected bills is certainly a quick, agile and effective solution, as long as we do not forget that we are dealing with a credit product and that as such its overuse can generate problems in the medium and long term for our economy.

Add comment