Prepaid Card 101: Understanding Prepaid Cards

Posted By : admin

July 6, 2020

The best prepaid cards are so similar in a lot of ways to debit and credit cards that many people often mistake one for the other. However, unlike credit or debit cards, the best prepaid cards are not linked to savings or checking accounts.  

Before prepaid cards can be used, money needs to be loaded on the card first. When used for purchase transactions or ATM withdrawals, the money is immediately deducted from the balance that’s available on the card. Once all the balance in the card has been depleted, cardholders have the option to load money on the card anytime they want.

For many, prepaid cards are considered the best alternative to cash, with the money loaded on the card in advance before it can be used. Many people also view prepaid cards as the consummate option for those who are unbanked or those who have poor credit history or no credit history yet.

Understanding Prepaid Cards

In a way, having a prepaid card is very similar to carrying actual cash minus all the risks involved. In other words, you need not worry about misplacing or having your money stolen since they are safely kept in your prepaid card.

If you’ve heard of prepaid cards but not familiar with how they are used, you’d surely find this article of massive value. Below are some prepaid card basics you need to know:

Regardless if you’re a teenager trying to learn great money management skills or someone with bad credit, you’d benefit from using a prepaid card. With a prepaid card, you can practice responsible spending habits as you go along.

As mentioned earlier, using a prepaid card is one of the best ways to carry money around wherever you go. With your money safely credited to your prepaid card, you won’t have to worry about losing your money or having shady people steal them from you.

Just like other plastic cards, prepaid cards can also be used for purchase transactions and ATM withdrawals. What’s even better is they can also be used for online transactions. That means you can easily purchase whatever it is that you want without having to leave the comforts of your home or office.

Those who are looking for ways to curb overspending or stick to a budget, a prepaid card can be a truly beneficial ally. Unlike credit cards, prepaid cards don’t come with credit capabilities. In other words, as soon as the balance on the card has been depleted, the spending also stops automatically.

Fortunately, you can use the card right away as soon as money has been successfully loaded onto it. Loading money on your prepaid card is both easy and straightforward. For instance, you can load money onto your card through secure online portals.

Prepaid Card Upsides

Why do people love prepaid cards? Primarily because they come with the following enticing benefits:

Security. Aside from keeping your money safe, prepaid cards can also be ideal for online transactions. While it would be great to be able to use your card for online purchases, what makes prepaid cards even better is they won’t put any of your personal details at risk even if you do online transactions.

Habit forming. Some people prefer to practice with their prepaid cards prior to using credit or debit cards. Undeniably, since prepaid cards don’t come with credit capabilities, it’s easy for you to develop responsible spending habits.

Card for the unbanked. As mentioned earlier, people who don’t have access to banks for one reason or another have a great alternative in prepaid cards. What’s even wonderful is you can easily obtain one without going through all those time-consuming and stressful bank applications.