Banks usually provide a variety of cards, such as: debit cards, credit cards, point cards, prepaid cards, refund cards, etc. Each card has its own set of functions that would suit different types of demand.
The most common card types are known to be debit cards and credit cards. How can you distinguish between the two?
Debit card is one of the most basic products provided by banks. The set of functions of each debit card depends on the issuing bank, some functions of debit card include: bill payment, cash withdrawal, card top-up, phone top-up, savings, etc.
Debit cards are divided into 02 main types:
- Domestic debit card: the area of card use is only available within the issuing country and usually free
- International debit card (such as Mastercard Debit, Visa Debit, JCB Debit, etc.): the card can be used worldwide but will be subject to additional charges
Whether it is a domestic or international debit card, you can only spend as much as you deposit. Additionally, some banks require you to maintain a minimum balance of approximately 50.000 VND at all time (Timo does not have this requirement).
The process of applying for a debit card is easy and can be done quickly. To open a debit card, customers only need to over 18 years of age and hold a valid National ID/Passport and Valid Visa or Temporary Residence card (for foreigners).
In contrast with Timo making it free to issue a debit card to new customers as, some banks also charge card issuance fees.
Upon planning to open a credit card, you should consider that each bank has a different set of terms and conditions for credit cards.
Each issued credit card is subject to a credit limit depending on the approved application. Credit cards are mainly known to be settling either direct or online payments.
In contrast with debit cards, credit cards allow customers to spend money equivalent to their credit limit first before paying for it later. In other words, this means that, with your credit card, your issuing bank gives you a loan for you to use for the time being. You can enjoy a grace period up to 45 days without any interest once the loan is paid off totally. After 45 days of spending the loan without any interest rate, you will have to pay for the loan. After 45 days of spending the loan without any interest rate, you will have to pay for the loan. If the loan is overdue, the cardholder will be subject to an amount of interest rate calculated by the system and stated in the terms and conditions of the issuing bank.
Due to the confusion between the main functions of cards, some customers use their credit cards to withdraw cash at ATM machines. Although this is not prohibited by any bank, cash withdrawal from credit cards should be limited and avoided. In addition to high withdrawal fee (up to 4% of the total withdrawal amount), the interest charged for cash withdrawal from credit cards is also high.
There are also two types of credit cards: domestic credit cards and international credit cards. Although they have the same functions, their benefits and scope of use are different.
- Domestic credit card: domestic credit cardholders can be entitled to privileges and special offers from local brands and shopping centres, and the scope of card use is also limited within the issuing country.
- International credit card (such as Visa Credit, Master Credit, etc.): international credit cards can be used both locally and internationally. International credit cardholders can be entitled to privileges and special offers from brands and shopping centres worldwide. However, there will be a currency exchange fee ranging between 3% – 4% when the card is being used abroad.
Conditions required for opening a credit card depend on the set of policies and requirements of each bank. While most banks require customers to verify their financial capability to prove that they can afford to pay for their credit limit, Timo does not have this requirement for our Mastercard’s customers.