Prepaid Cards 101: Here’s What Every New User Should Know

Posted By : admin

November 8, 2021

 

If you have heard of prepaid cards and know all the amazing benefits they offer, it is likely that you are already considering getting one. The massive rise in the popularity of the best prepaid cards is unprecedented. In 2015 alone, more than half of the American population already own a prepaid card.

The Synergistics Research Group conducted a study and found out that there’s over a dozen different prepaid cards to date that are available in the market. Understandably, if you are not that familiar with this innovative financial instrument yet, you’d be clueless as to what to look for.

This article should serve as your quick and easy guide to the best prepaid cards so choosing the one that fits your needs is easier. Below are some of the basic things every new prepaid card user should know and keep in mind:

Prepaid and debit cards have many similar features 

Since most plastic cards look almost identical, it’s easy to mistake one for the other. However, there is one distinct difference that sets prepaid cards from the rest: they are not connected to any savings or checking account. 

However, in terms of features and function, prepaid cards are more similar to debit cards. Just like those who use debit cards, prepaid cards users will be using their own money and not that of the bank.

Also, unlike the typical debit card, prepaid cardholders won’t need to connect their cards to any bank account. All that’s needed is they load money on the card. Once money has been loaded successfully, the prepaid card can already be used for purchase transactions and ATM withdrawals.

Once all the balance on the card has been used or is no longer sufficient to cover a purchase, transactions will be declined. Fortunately, the prepaid card can be used again once the balance on the card has been replenished or once you load money on the card successfully.

Prepaid cards are great money management tools

If you are like most people, it is likely that you have a hard time managing your money accordingly or curbing overspending. Fortunately, a prepaid card can be your very helpful ally. Why? It can effectively limit your spending.

As mentioned earlier, transactions are automatically declined if the card has no sufficient balance or if all the balance has been depleted. If you load money on the card and spend all the balance, you have the option not to load the card until the end of the month so you can avoid spending more than you are supposed to.

Even those who have access to banks are now using prepaid cards for their transactions as it’s not only convenient, it helps them easily keep tab of their spending. For instance, some load money they set aside for monthly groceries on the card. Once it has been depleted, they won’t load money until the next month.

In essence, most prepaid cards are designed to help users manage their spending effectively while ensuring risks and spending are limited.

Prepaid cards come with beneficial and exciting features

Prepaid cards are designed to cater to various needs of consumers. That said, they offer exciting and peerless features that make users love them all the more. Case in point: some people use their prepaid cards to pay their online bills. Some also use their prepaid cards for automatic monthly payments.

Some prepaid cards are also designed for easy management using mobile apps. At least 70 percent of cardholders use their mobile phones to check their balance as well as transaction histories. For additional convenience, some prepaid card providers also send text alerts to prepaid cardholders.