Plastic money

banking

Plastic money is the term that groups credit and debit cards, as well as other similar substitutes for cash.

Plastic money owes its name to the material from which it is made. Its use is quite widespread today and it is accepted as a means of payment in many shops.

Advantages and disadvantages of plastic money

Among the advantages of plastic money we have:

  • Reduces the risk of cash loss or theft. If the user is assaulted, for example, they can call their financial institution and report the incident to prevent purchases from being made with their money.
  • Provides greater comfort to the person. Instead of carrying a lot of coins or bills to make a transaction, you only need to load one card.
  • It allows regulators to have greater control of capital movements. All plastic money, in general, has entered the financial system and its origin can be monitored.

However, there are also some disadvantages:

  • The user can spend without realizing the impact on their savings. When the egress is less tangible, the buyer tends to be less diligent. This is particularly noticeable with credit cards.
  • The use of cards implies an additional cost, especially in the case of credit cards that charge interest. In addition, the payment of different types of commissions is required, and some only for the fact of carrying the plastic money.

Types of plastic money

Among the main types of plastic money we have:

  • Debit cards: They allow transactions to be made from the funds that the user has in a bank account. If the saver does not have sufficient capital, the operation is denied.
  • Credit cards: When the person uses this tool, his financial institution is lending him money. The return can be scheduled in one or more installments, and interest must also be paid.
  • Purse cards: They are prepaid cards that are loaded with money to later make various small payments. One of its main advantages is control over spending.
Difference between credit and debit card

Tags:  economic-dictionary economic-analysis derivatives 

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