If you are wondering if there is such a thing as debit credit cards, the answer is technically yes, although they might not be what you think they are. Any traditional credit card is not a debit card, but there are some credit cards that require cash to maintain them, and they could be considered debit cards.
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These credit cards are usually called preloaded credit cards. They look like a standard Visa, MasterCard, or American Express card but they are loaded up with your own money rather than actually being used as credit.
How does a preloaded credit card work?
You have two options when choosing a preloaded credit card. You can go to any local store and buy one off the rack. These cards are completely anonymous; they don’t contain any of your personal information. You take them to the register and you pay the cashier the amount that you want on the card.
The other option is that you can buy one online and have your name put on it. The benefit to choosing this option is that it offers a small measure of protection against theft or loss because it will contain a name on it.
In most cases, you will be required to pay a fee when you first purchase the credit card of anywhere between $1 and $10 depending on what card you use, where you buy it from and how much money you place on the card.
Some companies require you to pay a fee each time that you reload the card while others don’t charge any additional fees. In the past they charged a non-use fee or a fee if the card was more than a year old, but the credit card rules from the Federal Reserve changed that and this is now illegal.
As you use your card, the amount available is reduced. Simply put, your cash deposit is being debited.
What about a bank debit card, is that a credit card?
No, your debit card from your bank is not a credit card; however, you can certainly pay as a credit payment when you go to the store. The difference between this and a regular credit card is that even though you call it credit, it will still be debited from your checking account.
Many banks offer a credit card that can be attached to your checking account to prevent going over the limit on your card. However, you card agreement must say this specifically or this is not the case.
Which is better, a bank debit card or a preloaded credit card?
Although this really depends on your personal preference, you should really consider a bank debit card over a preloaded credit card. The main reason for this is that a preloaded card offers you no personal protection against fraud.
Say tomorrow your wallet is stolen and you have two preloaded credit cards and one bank debit card. When you call your bank, they will cancel the card and reimburse your account for any fraudulent spending. Of course, this is after you fill out a police report and some paperwork with the bank.
Now, you call the holders of your preloaded credit cards. If you bought one at your local department store, they aren’t going to do anything but tell you sorry. After all, how can you prove that you actually own the card? Even if you can produce the receipt, you can’t prove that you didn’t give the card to someone else!
If you bought a card with your name on it, then the company will likely be happy to cancel your card. However, they don’t offer any fraud protection. What’s more, they will probably not even reimburse you for the remaining balance on your card. Simply put, you are out of luck!
What other card options are there for people with bad credit?
You can consider a secured credit card option. A guaranteed credit card of this type requires you to pay cash to secure the credit, but the card itself is a credit card. As time goes on and you use your card, you are building credit.
What’s more, every protection that you get from a traditional credit card, such as fraud protection and credit card replacement are offered to those with secured cards as well. So, if your card is lost or stolen, you aren’t out the money that you have put into it.
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