What is Plastic Money?

Understand benefits of using plastic money.
Plastic Money
4 min

Plastic money refers to the various types of plastic cards used to make transactions. Plastic money generally refers to debit and credit cards made out of plastic, and the term originates from the physical material used to make these cards. These versatile cards can be used to withdraw cash from ATMs, make online transactions, or make effective money investments in various assets. They store your financial data in an encrypted format on magnetic chips to facilitate easy and secure transactions.

Different types of plastic money

Here is an overview of the most common types of plastic money in use:

  • ATM-cum-debit cards - A debit card is linked to your savings account and is one of the most common types of plastic money people use. You can use the card to withdraw money from ATMs, make payments at retail stores, and purchase goods and services online. Every time the card is swiped or tapped; money is instantly debited from your bank account.
  • Credit cards - A credit card is a credit product that allows you to make purchases and withdraw funds up to a pre-approved limit on credit. Transactions made using the card are paid upfront by the lender. You have to repay the sum by the pay-by-date to avoid interest penalties. This type of plastic money offers you revolving credit benefits since your credit limit is restored at the end of each month as long as you pay the balance.
  • Prepaid cards - Prepaid cards allow you to set a definite budget for your expenses. You can load these cards with the amount you anticipate spending. Once the funds run out, you can reload the card with additional funds using your linked bank account or the lender’s website. Prepaid cards essentially help curb overspending, which is usually associated with debit and credit cards.
  • Forex cards- Forex cards are a type of prepaid travel card that can be loaded with a foreign currency of your preference. Commonly used by overseas travellers, this type of plastic money eliminates the need to exchange physical currency notes for foreign currency when travelling abroad. The locked-in exchange rate feature of Forex Cards protects you from currency rate fluctuations during travel.

Benefits of plastic money

  • Convenience - The invention of plastic money has introduced a cashless lifestyle and made our lives easier. Today, you can simply swipe or tap your debit or credit card to make easy payments without having to carry a wallet full of cash.
  • Safety - Enhanced safety is one of one of the chief benefits of using plastic money. Using debit or credit cards eliminates the need to carry cash, reducing the possibility of theft or robbery. Moreover, these cards are equipped with a range of protection features, including PINs, two-factor authentication, and EMV chips, to ensure robust security against thieves and hackers.
  • Global acceptance - International debit and credit cards can be used to make payments from anywhere in the world. Plastic money has made cross-border transactions easy and simple. You can use plastic money to make transactions on an international trip or shop online from international websites with ease.
  • Financial freedom - Fiscal freedom is yet another significant benefit of plastic money. Credit cards allow you to make transactions and pay back later. This allows you easy access to funds during times of need. Similarly, ATM-cum-debit cards allow you to withdraw funds from ATM 24x7. In other words, you do not have to depend on banking hours to access funds needed to meet emergency expenses.
  • Expense ledger- For transactions made using various types of plastic money, a digital record is maintained online. You can easily access these records to track expenses and assess spending patterns.
  • Rewards - Certain types of plastic money come with the added incentives of rewards and benefits. Credit cards offer different types of rewards, including cashbacks, exclusive discounts, and lounge access perks. These added benefits enhance the value of plastic money.

Also read: How to invest your EPF savings

Plastic money in India

While introduced in the 1990s, the use of plastic money was not popular among Indians until the early 2000s. Most transactions were limited to ATM withdrawals until the 2010s when the e-commerce boom unleashed the power of plastic money. Both demonetisation (2016) and the COVID-19 pandemic gave significant impetus to the switch to plastic money and a cashless economy. The lack of cash and the need for physical distancing prompted more and more Indians to switch to electronic payment modes linked to various types of plastic money. All this, plus the Indian government’s conscious efforts to promote a digital economy, have contributed to the widespread use of plastic money in the country.

Consequently, the Indian financial landscape has also been transformed with plastic money like debit and credit cards gaining momentum. Firstly, the use of plastic money has ushered in better financial inclusion, where people without access to traditional banking services now use debit cards to make payments and access funds. Secondly, limiting record less cash transactions has also helped promote transparency and accountability. Since every plastic money transaction is recorded, tax compliance becomes easy. Lastly, the growth of plastic money in India can be linked to the relentless innovation of the fintech sector. The development of new e-wallets, payment apps, and contactless payment technologies is further enhancing the ease of transactions and streamlining user experiences.


As the popularity of cashless transactions continues to rise in India, the importance of plastic money cannot be denied. Debit and credit cards have revolutionised the way you carry out transactions, bringing improved convenience, enhanced security, and the coveted ability to better manage finances. That said, while there are several benefits of plastic money, improper management can land you in debt. Thus, it is important to use plastic money wisely, ensuring that you enjoy the perks while avoiding the pitfalls.

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As regards deposit taking activity of Bajaj Finance Ltd (BFL), the viewers may refer to the advertisement in the Indian Express (Mumbai Edition) and Loksatta (Pune Edition) furnished in the application form for soliciting public deposits or refer https://www.bajajfinserv.in/fixed-deposit-archives
The company is having a valid Certificate of Registration dated March 5, 1998 issued by the Reserve Bank of India under section 45 IA of the Reserve Bank of India Act, 1934. However, the RBI does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

For the FD calculator the actual returns may vary slightly if the Fixed Deposit tenure includes a leap year.