Debit Card vs. Prepaid Card: The Real Differences, Pros & Cons

Statistics released by the Hong Kong Monetary Authority indicate that the number of card transactions increased heavily. Although the total number of debit cards in circulation cannot be calculated due to debit card brands overlapping in one card, the total number of transactions increased by almost 7% in just a year. Slowly but surely, it seems that cash payments are becoming obsolete, and the majority of people in Hong Kong rely more often on their debit and/or prepaid cards.

But are you 100% certain that you understand the difference?


Debit card: Pros & Cons

A debit card, also called a settlement or payroll card, is linked to a cardholder’s check account in a bank. Although different cards come with different spending options, benefits, and fees, certain debit cards may allow you to withdraw more money than you might have on your account at that moment. In such situations, a bank may charge you a fee to cover the cost of an ATM withdrawal or a purchase that exceeds the amount on the card. Consequently, a cardholder is also required to repay the overdraft.


  • Pros

  1. Debit cards are easy to use, as you always have an entire check account amount at your disposal.
  2. They can be used internationally, so no matter for how long you travel abroad, you don’t have to worry about the amount of cash you have with you. Even if you are handling different currency, it will be converted automatically.


  • Cons

  1. With debit cards come additional expenses, monthly and annual fees for card services.
  2. Since it is linked to a bank account, a cardholder is always at risk of fraud due to a relatively lower level of protection.


Prepaid card: Pros & Cons

Unlike a debit card, a prepaid one is not linked to a bank account and the money you intend to spend must be loaded onto the card in advance. The idea behind a prepaid card, other than simplicity and practicability, is to prevent you from spending more than you have.


  • Pros

  1. As you must load the card before using it, you can never spend more money than you have.
  2. If issued by a certain business, you can enjoy purchase benefits at that place of business or their affiliates.
  3. You can easily track all your transactions, as nowadays most prepaid cards like UniCard Prepaid Card are accompanied by a mobile application in which you can monitor your spending in real time.
  4. A prepaid card is not linked to a bank account which eliminates the risk of fraud. Users of our Mastercard can be sure that all transactions are protected by the best online security systems.
  5. With UniCard you can take advantage of our multiple-currency card program, ideal for expats and professionals involved in forex trading.


  • Cons

  1. You might find yourself without funds at an inconvenient time.
  2. The majority cannot be used at an ATM.
  3. Prepaid cards usually come with an expiration date and if you don’t get the chance to spend the remaining amount until that date, you run the risk of losing the leftover sum completely.


Debit & Prepaid Card Similarities

Both cards come with a Mastercard or Visa logo and have a similar function: you get to make purchases when you don’t have any cash on you.

In terms of costs, though in most cases debit and prepaid cards are free, a cardholder is usually obliged to pay a monthly fee which differs from one bank or a card issuer to the other.


Debit & Prepaid Card Differences

  • Bank or business dependency

What sets the two apart is the fact that a prepaid card can be linked to a specific business brand. Thus, unlike with a debit card that can be used in any store or place of business that accepts Visa or Mastercard, prepaid cards that are linked to a specific business can only be used at that place of business or one of its affiliates.


  • Limitations

A prepaid card limits you to the amount you have previously loaded, while a debit card allows you to spend the sum you have on the associated bank account.

A prepaid card can also come with an expiration date, especially if issued by a specific merchant. In that case, you are advised to spend the money you have prior to the expiration date, as you might not be able to withdraw the leftover sum past that day.


  • Specific use

Prepaid cards are also often issued as gift cards. For instance, we offer a Mastercard gift program to issue cards that act as vouchers. A cardholder can use it to purchase whatever they want to in an affiliated online or physical store.   


  • Reuse

A debit card can be used for as long as the cardholder maintains the bank account their card is associated with. Even if they spend almost an entire amount, once additional funds reach your check account, you can start using the card again.

Upon spending the amount you have on your prepaid card, you can simply reload it with cash or check. Generally speaking, this type of card can be reused until the expiration date for as long as you keep reloading it.


Bottom line

Due to numerous advantages that accompany both types of cards, it is up to an individual to make a final decision depending on their immediate needs.

UniCard has been created with a cardholder’s specific requirements in mind. Our aim was to provide a card that will deliver the simplicity of use and practicability, along with a multitude of additional benefits. To find out more, check out our website for more information about the card’s features and application process.




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