Why are prepaid cards in Germany popular with Expats?


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What is the difference between a bank card and a prepaid card? and why do Expats in Germany love them?

With every purchase, the question arises of how best to pay in Germany. Below is a look at prepaid cards and why they are attractive to Expats in Germany.

What are the differences between a bank card and a prepaid card?

Purchasing at Amazon or Media Markt: But which means of payment should you use? You may have already asked yourself this question. We would therefore like to introduce you to the differences between a bank card and a prepaid card in this guide . We want to help you pay with the right card in the future.

prepaid cards

What is a bank card?

A bank card is colloquially understood as a number of different means of payment. These include above all the so-called girocard and credit card . The girocard is also known under the terms giro card, EC card, V Pay card or Maestro card . There are already big differences between the girocard and the credit card. Here we would first like to give you a brief overview of the services and the purpose of the various bank cards.

What are the differences between the different bank cards?

The credit card and the girocard are fundamentally different. The girocard is usually associated with a current account. The money is deducted from the current account immediately with every payment. It is different with a credit card.

This is where you usually get a loan. The money spent is then usually only collected from the clearing account with a delay of about a month. You don’t pay any fees for this loan, so you have a completely free credit line. You can also use your credit card for online purchases.

With a girocard, on the other hand, you can only pay in shops and withdraw from ATMs. Both are also possible with a credit card. There are also differences when it comes to the possibilities of employment abroad.

What is a prepaid card?

The prepaid card is a special means of payment that consists of different product groups. Usually, however, a prepaid card is not linked to a checking account. In addition, no credit will be made available to you. 

This is what distinguishes the prepaid card from bank cards. In addition, the cards are only issued by a bank in rare cases. As the name suggests, with a prepaid card you also have to top up credit first in order to then be able to pay. There are many different configurations of this card type.

What different prepaid cards are there?

To give you an idea of ​​prepaid cards, we have put together a short list of different prepaid cards:

  • Cell phone prepaid cards (also known as prepaid cards)
  • Prepaid cards for online shops (e.g. for Amazon or Otto)
  • Credit cards for retailers (e.g. for Aral or dm)
  • GeldKarten (outdated system of giro cards with a credit chip)
  • Prepaid general payment cards (also known as prepaid credit cards)
  • other types of prepaid cards (for example, for use in limited locations such as a stadium or university)
prepaid cards

Are there prepaid cards that are issued by banks?

As you may already see from the overview, the distinction between prepaid cards and bank cards is not that easy. 

In general, prepaid cards are very rarely issued by banks. There are exceptions, however. These relate in particular to the so-called Geldkarte and prepaid credit cards. The GeldKarte is an additional function of the normal girocard. Money is loaded onto a chip from which payments are made. 

The function in the narrower sense is a prepaid card. Nevertheless, the GeldKarte must be clearly distinguished from other prepaid cards. A similar system is the modern NFC-Girogo payment system, which is also an additional function of the girocard. Prepaid credit cards must also be differentiated from other prepaid cards, as these are also issued by banks. 

The difference between a prepaid credit card and a conventional credit card is that there is no credit with a prepaid credit card and the card must also be topped up with a credit before payment.

What distinguishes normal prepaid cards from bank cards?

If you decide between a bank card and a classic prepaid card, you should have the exact demarcation in mind. The thing is basically relatively simple. A prepaid card is significantly less flexible than a bank card. 

This is because a prepaid card is usually earmarked. You can only use a prepaid card for a specific purpose, such as shopping at a special retailer. In addition, you have to “pay” a prepaid card before you can dispose of the credit. 

The system of a bank card is reversed accordingly. In principle, the most important delimitations can be summarized as follows:

Credit card:

  • earmarked
  • Charge before payment

Bank card

  • not earmarked
  • Debit after payment

What are the advantages of a bank card over a prepaid card?

In general, the two specific differences already show where the bank card is superior to the prepaid card. If you bet on a prepaid card, you lose a lot of flexibility. For example, if you have bought a prepaid card from Amazon, you can only shop there. 

If, on the other hand, you use a bank card, you can basically pay at a retailer of your choice, taking into account changing interests and price differences. 

The financial component also plays a role. A bank card enables you to pay first and only then to have to hand over the money. With a prepaid card, on the other hand, you first have to pay money and only then can you shop at all. 

So you get rid of your money much earlier. In addition, there is the potential disadvantage that you lose the card or simply forget it. The money is then already spent, but the credit is lost.

The advantages of a bank card in summary:

  • no definition necessary
  • greater financial leeway
  • can also be used on the internet and abroad
prepaid cards

What are the advantages of a prepaid card over a bank card?

Prepaid cards also offer some interesting advantages over bank cards. 

With a prepaid card, for example, it is possible to control your own finances much better. You always load a prepaid card with a predetermined amount and can only spend this accordingly. This is usually different with bank cards. You usually don’t see how much money you’ve already spent. With a normal bank card, regardless of whether it is a girocard or credit card, you can quickly lose track of things. That, in turn, cannot happen with a prepaid card. 

A prepaid card also limits the risk of loss or theft. If you no longer have your prepaid card, you will lose at most the credit on the card. Loss of your bank card may result in huge losses. Generally, however, the banks help to limit risk. Liability is usually limited to 50 euros. Nevertheless, there is, at least in theory, a higher risk of loss. You should also note that a prepaid card is a good choice for gifts. That means you cannot easily give away a bank card. 

On the contrary, if you knowingly hand over your card, you are acting with gross negligence. On the other hand, you cannot easily give away a bank card. 

The advantages of a prepaid card in summary:

  • better control of finances
  • low risk of loss
  • ideal for gifts

Is there a good intermediate solution between a bank card and a prepaid card?

The best example is certainly the prepaid credit card, because it combines all the advantages of a bank card with those of a prepaid card. However, you have to make sure that there are also differences between prepaid credit cards. 

For the perfect hybrid, you have to rely on a real prepaid credit card without a checking account. With these cards, which you can purchase on the Internet or from retailers, for example, you must first top up a credit balance and then have it at your disposal.

When is a prepaid card the right choice?

Usually the prepaid card is just a good add-on product, but that is exactly what almost every consumer should consider.

Prepaid cards are particularly interesting as gifts for others. But prepaid cards can also make sense for you for your own use. This applies, for example, to topping up phone credit or activating functions in online games.

The use of prepaid cards is particularly interesting for all those who do not have a credit card and cannot use it to pay on the Internet.

Then prepaid cards for Amazon or other online retailers also make sense.

Expaturm aims to help educate Expats in Germany on key issues that they will have to deal with while living in Germany by providing everything you need to know about Banking, Healthcare, Lifestyle, and Housing in Germany


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