There is a relative similarity between various bank cards in terms of look, purpose, and the form of information available on the card, such as the 16-digit card number, expiry date, Card Verification Value (CVV) at the back, payment network logos, etc. However, each of these cards has certain characteristics that affect the client’s financial life in different ways.
This article will discuss the big and small differences between various bank cards, so that you, as a customer, can choose the bank card that best suits your financial needs and transaction requirements.
Here are the various types of bank cards that you need to be aware of:
Mada Card (Debit Card)
The Mada card is directly linked to a customer’s bank account. The payment or cash withdrawal process is tied to the amount of funds deposited and available in the account.
When a customer uses the card at point of sales for shopping or cash withdrawals, the amount is deducted from the customer’s bank account balance automatically. On the other hand, a customer cannot complete any transaction if his/her account has insufficient balance to cover the purchase or withdrawal.
This card enables the holder to spend money by withdrawing from ATMs or by purchasing from electronic points of sale within the limits of the cash that has been deposited and credited in the card account.
The prepaid card must be topped up before being used by the customer. The topping up of the card can be made through transferring money from the customer’s current account via available and authorised means like ATMs, and online and phone banking to the prepaid card. If the money deposited into the card is used up, the customer can only use the card after reloading it.
A credit card is a credit facility product offered by banks or licensed finance companies. These cards allow the holder to buy goods or pay for services, utility bills, or withdraw cash in the form of debt up to the credit limit pre-set by the card issuer. The cardholder can then pay back the amount due under the credit card agreement.
In accordance with the rules and regulations issued by SAMA, a credit card issuer must follow an effective strategy to manage the risks of issuing such cards to its customers. It must carry out an evaluation of the eligibility and suitability of the applicant for the credit card and ensure that it is commensurate with his or her financial capabilities. It should be noted that there is an interest or fee that is applied to the amount due on the credit card, if the amount due is not fully paid before the grace period expires.
A Charge card is similar to a credit card to some extent, but it requires the holder to pay the amount due in full upon receipt of the card statement or on the due date. Banks and finance companies licensed by the Saudi Arabian Monetary Authority (SAMA) issue credit cards and monthly debit cards after obtaining a documented request from the client.
All existing and potential bank card holders must first understand the difference between the various types of bank cards to be able to choose the bank card that works best for them, without having to pay additional and avoidable fees and interest charges.
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