Debit and Credit Cards

Cards are payment instruments that allow its users to make many transactions, including withdrawing money, paying services and doing money transfers.

Usually cards are linked to deposit accounts and are issued by credit institutions, payment institutions or other financial institutions.

Although cards are a comfortable payment method, it is important to note that merchants are not obliged to accept it as a mean of payment.

Institutions can issue different types of cards, being the most common Debit, Credit and Pre-Paid Cards.

Debit Cards

This type of cards is always linked to a current/savings account. It is one of the most used means of payment used to make transactions from the accounts.

Debit cards allow its users to withdraw cash, effect payments of goods and services and transfer money.

Anytime a client uses the debit card, the money will immediately be removed from his/her account, reducing the balance of the account.

Credit Cards

Credit cards allow you to make payments in Malta and abroad but the money spent is not immediately withdrawn from your account. In practical terms, when you use this type of card you are taking a loan from the Bank, that is borrowing you money to be repaid at a later stage.

The amount you use shall be repaid to the bank in one of the following ways:

  • repaying the entire amount on a given day, or
  • paying it back in fixed instalments for a certain period of time. In this option the bank will also charge you interest.

Credit cards have a pre-established limit (plafond) agreed between you and the card issuer. For this reason you will be allowed to use the card until that specific limit.

Not everyone is entitled to have a credit card and not everyone should have one. Before applying for one and starting using it, consider that:

  • you’ll always have to pay a certain amount related with the amount you used in the previous period
  • if you don’t pay the amount established, you may pay fees and interest
  • it is better not to spend immediately and save a few months to buy something than contracting a debt to do so.

Pre-paid cards

Prepaid Cards are payment cards that are pre-loaded with a fixed sum of money. When a prepaid card is used, the money is deducted from the amount originally loaded onto the card, unlike a debit card or a credit card where the money is taken from a bank account or from a line of credit.

This type of card is very used because it is safer: in case of loss, theft, or fraud only the money still credited on the card is at risk, as the card is not linked to any account.

Prepaid cards are also particularly well-suited to young people as the amount they can spend is limited. There is also an annual limit to each card.

Having a card…

To have a card you need to establish a contract with the institution issuing it (which can be a credit institution – bank – or other type of financial institution).

The contract contains the terms and conditions to use the card, as well as the related costs (fees) and your rights and duties. You should always read carefully all the rules and information about the card and, if after reading those you still have some doubts, clarify them with the institution.

If the card you are acquiring is a credit card, you should also receive information about the interest rate being charged and how the repayment of the value used would be done.

A person over 18 years old can apply for a credit card. Your bank as the card issuer will carry out a credit scoring exercise to assess whether you are eligible for such a card.

If you are under 18, you may qualify for a credit card if you are an additional cardholder. For example, a member of your family (your mother or father) may have a credit card in their own name and the bank issues a card to you as an additional or ‘supplementary’ card holder. However, the main cardholder remains liable for all amounts owing, including any losses from a supplementary cardholder’s negligence.

Before applying for a credit card there are some questions you should ask yourself:

  • Do I need a credit card?
  • Will I be able to afford it?
  • Will I be able to meet the monthly payments?
  • If I decide to apply for a credit card what should I look for?
  • What are the charges applicable on the card that I am aiming to choose? What is the relative APR (Annual Percentage Rate)?
  • What is the annual fee?
  • Are there any interest free periods?

An institution cannot send you a card if you did not requested it. If you received any credit card that is not for you or that is addressed to you but you did not request, go to the institution and give it back.

The Annual Percentage Rate (APR)

The APR is an indication of the total cost of credit to a cardholder, expressed as an annual percentage of the amount of such credit. The total cost of the credit is not only the interest rate applicable on your credit limit, but includes any initial or annual fees.
The APR assumes that you will spend the credit limit in full on local purchases, at the start of the agreement with the bank and that repayment is made in 12 equal instalments inclusive of interest.

It does not include penalty fees and other fees which you may be charged if you don’t settle your bill on time neither the charges if you use the card abroad or when you withdraw cash from an ATM. The APR does not apply to debit cards.

Choosing between cards

With a credit card, you are borrowing money from the bank. If you don’t wish to incur debts, a debit card may be suitable for you. It is safer than carrying cash around and the amount in your bank account is basically how much you can afford to spend!

Before you opt for a credit card, consider whether a credit card will be an occasion to spend beyond what you can afford. You may postpone paying with a credit card, but in the end you will have to pay your bill. The more you delay paying, the more interest you will be charged on any outstanding balances.

A credit card allows you to postpone the payment and allows an interest-free period (a period in which interest is not charged if you pay your balance in full by the due date) which is written down on your statement. The interest you will be charged if you postpone payment.

Advantages of debit cards

  • It frees you from carrying any cash or cheque books and are more accepted than cheques;
  • You won’t need to show your identification or giving out information at the time of the transaction;
  • You can use them when travelling abroad (if it is an internationally recognised card);
  • You will be able to make online shopping from some entities;
  • You will not pay any interest on debit cards as is the case with credit cards.

Disadvantage of debit cards

  • To use it and make payments or withdraw cash you need to have that money available in your bank account.

Advantages of credit cards

  • Credit cards can enable you to build a positive credit history and that can enhance your ability to seek a future personal loan or a home loan;
  • You will have cash available in the case of an emergency;
  • Automatic record keeping and reconciliation through statements viewable through internet banking;
  • It allows you to do online shopping;
  • Combining many purchases into one payment.

Disadvantages of credit cards

  • Credit cards may be easy to get but not so easy to manage;
  • You should also be careful with:
  • Impulsive spending increases;
  • Temptation to overspend;
  • Purchases of non-essential items;
  • Misuse of the card which can lead to problems with your bank tarnishing your credit history.

Chip & Pin

According to PSD2, all face-to-face and online transactions need to be authenticated by Strong Customer Authentication (SCA) using two of the following authentication measures, unless they fall within an exemption.

  1. Knowledge (something only the customer knows) – like a password or PIN.
  2. Possession (something only the customer has) – like a mobile or card.
  3. Inherence (something unique to the customer) – like a fingerprint or their behavioural data.

Chip and PIN cards are compliant with PSD2 provisions. Instead of signing you can enter a secret four-digit PIN. Until all cards in Malta are chip and PIN, you would be able to pay for your goods or services either by signing to confirm payment (the process we are accustomed to) or entering the PIN at the trader’s terminal.

Some banks may only allow you to confirm payment by PIN, if your card is “chip & pin” enabled.

Where will the chip be and how can you know if your card has one?

Your card shall have a chip. The chip is buried inside the card but what you can see is the silver or gold coloured square on the front left-hand side of the card. There will be occasions when the person accepting your card for payment, whether in Malta or abroad will not be able to process a PIN transaction and you will be required to sign instead. Your card shall therefore retain its magnetic stripe and signature strip on the back. You might also be requested to present an identity card or passport to identify yourself to the vendor.

How does it work?

You will use your PIN card wherever you pay by card. The card shall be inserted in a PIN pad, and you just need to input your personal identification number for the transaction to go through. If you enter the PIN correctly, the system will confirm the transaction and you will be given a receipt.

Please remember that no one except you shall know your PIN. This includes retail or bank staff.

Some tips related to chip and pin cards:

Signature: Although your card has a chip, it is still advisable to sign on the card’s reverse, as the signature will continue to be used for verification in certain situations (e.g. travelling abroad to a country where chip and PIN is not used or where the retailer has not upgraded to chip and PIN).

The PIN: If you consider that you might have difficulties remembering the PIN defined by your bank, you can change to a number that is easier for you to remember. This change can be made at a cash point or by calling your bank. Your bank can also allow you to change the PIN at your ATM.

If even that way you have difficulties remembering your PIN, rather than learn it digit by digit, learn the pattern that you need to trace on the keypad with your fingers.

Know your charges

You should always be aware of the charges that a Bank can impose when using your card: to withdraw money from an ATM, to make payments, to replace it etc. The fees vary depending on the type of transaction, there are some cards that charge an annual fee. If you have a credit card, you must pay off a minimum amount each month by a set date. If you miss a payment, there may be a penalty charge.

Be aware that most of the Banks will charge you to withdraw cash using your card from an ATM in Malta or abroad and such charges may differ between a debit and a credit card. It is most likely that your bank will impose a flat fee or a fixed percentage on the value of the withdrawal. In addition, some banks start charging interest straight away if you withdraw with your credit card.

The Currency Conversion Fee (or Overseas Transaction Charge)

If your bank bills you in euro and you have used your card in any Member State where the euro is the national currency, your bank will reduce the balance of your account in the amount of the transaction with no additional charges.

However, if you have used your card in a country where the euro is not its national currency (such as the UK, USA or Canada), your bank is likely to charge a currency conversion fee (or overseas transaction charge) that will be separately disclosed on your card statement with each foreign purchase. The same charges may apply when buying on-line.

If your bank charges such a fee, check your card’s terms and conditions for more information as to how and when it is applied. It’s wise to find out what are the fees attached to your card before you leave for your travels so that you will be able to budget your spending abroad.

To make an informed decision on the type of card that you may apply for and to get exposure to the whole picture of tariffs which might be imposed by the major banks in Malta, click on the section “Compare fees & charges

Helpful tips

Your card and pin

  • Sign the card as soon as you receive it. Memorise the pin. Never write the pin on the back of your card or keep the pin in your wallet. You may be risking big-time if you include your pin with your contacts on your mobile.
  • Make sure you keep your card safe and destroy the pin upon receipt. Don’t ever tell anyone your pin or write it down.
  • Many banks invite you to change your pin to any number of your choice. However, don’t choose a number which, with some trial and error, anyone would be able to guess it (such as your birthday).
  • Keep a photocopy of your cards (front and back) in a secure place at home. You may find the photocopy useful if your bank is investigating unauthorised use of your card by other persons.
  • Never lend your cards to others.
  • Card numbers, PIN and other financial identification details should never be sent in an e-mail message.
  • Settle any credit card bills monthly and if possible avoid accruing bills because interest is charged on any outstanding amounts. If this is not possible, you should ensure that the minimum repayment amount displayed on the statement is paid on time.
  • Save your bank’s 24 hour number. If you find that your card has been lost or stolen, you have to call the bank straight away and notify the loss/theft.
  • If you notice any unauthorised transactions in your statement, inform the bank as soon as possible and within 13 months from the debit dates. If you are required by the bank to report the incident to the police you must do so within 7 days of the request. If you do not adhere to these instructions, or to any other instructions your bank may give you, you might risk not having these transactions reversed.
  • As is the case for passwords, one should protect the PIN as if it were his/her house key. A password is personal and should never be divulged to anyone.

Using your card in a shop or at an ATM

Don’t let your cards or your card details out of sight when making a transaction. Ensure that the transaction is conducted in your presence.

  • When using your card at an ATM, always take ATM receipts with you.
  • When entering your PIN in an ATM or shop, shield the keypad with your spare hand.
  • Be aware from any persons offering assistance while using the ATM.
  • Put the money away quickly. If you want to count the banknotes, do it quickly while still standing close to the ATM so that your body shields the money from others.
  • When you use your cards to make a purchase, make sure that the amount on the transaction voucher produced by the shop for your signature matches the amount of the purchase.

Contactless Cards

Cards are one of the most innovative payment instruments. Holders do not need to physically insert the cards into any device but simply hold it up to a secure reader. Also mobile phones or tablets can use near field communication (NFC) technology to enable payment by tapping the devices on a contactless payment terminal.

Instead of using cash, customers can pay by simply tapping their card on the secure point-of-sale (POS) terminal and the payment is processed instantly and automatically. This card will work for payments up to € 25 both locally and abroad with contactless-ready POS showing the contactless symbol.

These cards are extremely secure with a number of controls in place and the latest security technology.

There is also the same protection against fraudulent transactions as the existing chip and PIN system. As an extra precaution, customers will be asked to enter their PIN from time to time to confirm their identity.

Use of cards over the internet

Nowadays many people use the internet and the new electronic payment methods allow us to buy and sell online. The use of payment cards is very common for distance purchases.

If you intend purchasing on-line, make sure you use safe and reliable sites in order to safeguard your online security, especially your financial information.

  • Always do your on-line shopping from a trusted site rather than choosing a random one suggested by a search engine. If you know the site, it is less likely that you will be ripped off. Check out their after-sales too.

  • Do not keep your passwords, login details and PINs written down.

  • Never give card account numbers over the phone unless you are certain that the person on the other side of the line is reputable.

  • Never respond to e-mails requesting your credit card details. Reputable banks and organisations do not request your personal details by e-mail.

  • Never continue your online purchase using your credit or debit card from a site that does not have SSL (secure sockets layer) encryption installed. You’ll know if the site has SSL because the URL for the site will start with HTTPS:// (instead of just HTTP://). An icon of a locked padlock will appear, typically in the status bar at the bottom of your web browser, or right next to the URL in the address bar, depending on your browser.

  • Ensure that you have software that detects the presence of malicious programmes or unauthorised access to one’s computer. Security software (such as an anti-virus programme, firewall) not only protects the computer system itself but also the information stored within. One has to ensure that security software is always active, updated regularly and is capable of scanning files received through e-mail messages as well as those downloaded from internet websites.

  • Ensure that you agree with the amount to be charged to your card when ordering items over the internet. This amount may include shipping, postage, handling and packing fees. Keep copies of all invoices/correspondence indicating the description and cost of the ordered items.

  • Access internet banking or shopping sites by typing the address into your web browser. Never go to websites from a link in an email. Also Beware of spelling mistakes or sites using a different top-level domain (.net instead of .com, for example). These may not be legitimate sites and their intensions may not be genuine. Although the prices on these sites might look enticing, it is their trick to tempt you into giving up your personal and payment details.

  • Use strong passwords when using online shopping websites. Remember that most of the sites save your personal information and card details to make shopping easier and less time consuming. However, if your account is accessed, your personal information would end up compromised. Also make sure you change your password periodically just in case it has been compromised without your knowledge.

  • Do not use online shopping website, or internet banking sites, from internet café’s or public terminals like local council computers. If you do, just remember to log out every time you use a public terminal, even if you were just checking your email. Also beware when browsing using an open Wi-Fi network. If you are in a public space, apart from unauthorised access to your computer you might get someone snooping over your shoulders to get your details.

Most card issuers have provided their customers with a more secure environment in which online payments are conducted. The cardholder provides the card issuer with a valid mobile number. When effecting purchases online, the cardholder will be requested to authorise the transaction by means of a unique passcode (OTP – One Time Password) that will be sent to the cardholder on the mobile number that has been registered at the bank. When the passcode is correctly entered, the cardholder will instantly be confirming that he/she is the authorised cardholder and the purchase will then be completed.

If an incorrect passcode is entered, the purchase will not be completed. This service is meant to provide safe shopping online.

SMS Alert – Monitor your card Transactions

Banks offer an SMS alert service whereby the card user is informed each time his card is used to withdraw cash from an ATM or when particular transactions are done on-line or physically at a shop.

Such a service MAY NOT alert you of ALL card transactions. Sometimes alerts are only sent if the transaction exceeds a specific limit, for example. Furthermore, some banks send an SMS alert for all ATM and online transactions, but only do so selectively for some transactions done in person when buying at retail stores.

Your bank can only send you SMS alerts if it knows your mobile number. You should ask your bank if it offers an SMS alert service and clarify when you should expect to be notified. Some banks offer a free SMS alert service, other may charge a nominal fee. Make sure that you provide your bank with a valid mobile number for each card that you have!

SMS alerts do not substitute your obligations when using cards.