New User’s Quick and Comprehensive Guide to Prepaid Cards

Over the years, prepaid cards have become quite massive. In fact, a Pew survey revealed that prepaid card use exploded by as much as 50 percent from 2012 and 2014. Since they were first introduced, prepaid cards have evolved into one of the preferred payment methods especially for those who don’t have access to banks.

In addition, prepaid cards have also become a favourite among millennials. In fact, many see prepaid cards as the consummate alternative to the traditional bank accounts as well as other plastic cards.

How Well Do You Know Your Prepaid Cards?

If you’re like most people, it is likely that you’re considering getting a prepaid card. If you don’t know much about it, here’s your quick and comprehensive guide to one of the best financial tools now available.

What are prepaid cards?

Prepaid cards look almost identical to credit and debit cards. However, unlike the latter, prepaid cards are not linked to any bank account. They also have to be preloaded with money before they can be used. Also, unlike credit cards, you won’t be “borrowing” money from the issuer. Rather, you are using your own money, the one you preloaded in your card. 

Gift cards are also classified as prepaid cards. However, gift cards are designed for one time use only. Reloadable prepaid cards on the other hand are designed for repeated use, given of course that the card has money in it. Fortunately, there are several convenient ways to reload money onto a prepaid card.

How can I use my prepaid cards?

Just like credit and debit cards, prepaid cards can also be used for merchant and online transactions. They are also often affiliated with established credit and financial networks. That means they are also accepted and honoured in establishments associated with the network.

Each time you use your prepaid card, the purchase or withdrawal amount will be deducted directly from the balance that’s available on your card. In other words, your transactions will be limited by the balance that’s available on your card. 

If the amount available in the card is not sufficient to cover a certain purchase, your transaction will be declined. Suffice it to say, prepaid cards can be very beneficial budgeting allies as they won’t allow you to spend more than you can afford to. When used for ATM withdrawals, you’ll need a personal identification number (PIN).

How do prepaid cards differ from credit cards?

While both cards can be used for both ATM and purchase transactions, they have a few distinct differences. Case in point: when you have a prepaid card, you need to reload money onto your card before you can be used. 

It’s the opposite when using a credit card since you don’t need to shell out any of your own money. The issuer will pay for your purchase or withdrawal first and you will pay for the purchase or withdrawal at a later date.

Transactions using a credit card are considered a loan so your credit history as well as your statement balance will be reported to major consumer credit bureaus. Transactions you do using your prepaid card will not be reported.

What do I need to consider when choosing a prepaid card?

Prior to choosing a prepaid card, it is important that you figure out how you will be using it. For example, would you prefer reloading money through reload networks or direct deposits? If for example, you prefer the former, it would be best to pick a reload network that’s easy for you to go to. 

Another important thing you need to look into are the charges and fees. In line with this, you need to also identify the transactions you’ll usually do using the card. Ideally, it would be best to opt for a prepaid card that charges less for transactions you often do.

Prepaid Card 101: Understanding Prepaid Cards

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.

What are the Two Types of International Prepaid Cards?

If you travel overseas frequently, you probably already know how important it is to stay within your budget and to ensure your money is safe at all times. Nowadays, it is reassuring to know that you can easily achieve both objectives by taking your international prepaid card with you each time you travel.

In several ways, international prepaid cards function just like general purpose prepaid cards but they come with extra features that are designed to make your life easier and more convenient when you’re travelling overseas.

Two Primary Types of International Prepaid Cards

There are two primary kinds of international prepaid cards:

General travel prepaid cards

These cards are more or less the same as the prepaid cards used locally. However, they come with features that are handy when you are overseas. For instance, it comes with emergency card and cash replacement, chip and PIN capability, and international ATM use.

Not all prepaid cards come with a chip however and it can be an issue. In many European countries, they have had chip functionality for ages now so you’ll likely encounter problems when using a prepaid card without a chip at automated payment points as well as unmanned kiosks.

Multi-currency prepaid cards

These cards will allow you to load cash in specific currencies prior to your trip. What makes this feature ideal is it allows you to lock in the exchange rate rather than paying for the current rate at point of sale or at ATMs.

However, it is not possible to load the card with just about any currency you like. In most cases, prepaid card issuers limit loading to a few currencies. Case in point, many prepaid card issuers allow loading of only 6 currencies, namely Australian Dollar, Canadian Dollar, Mexican Peso, Japanese Yen, Euro, and the British Pound.

Unbeatable International Prepaid Card Benefits

Taking your international prepaid card with you each time you travel can bring benefits that are hard to miss. While there are several exciting advantages of using your international prepaid card, some of the most remarkable ones include:

It can help you with your budgeting. Adhering to your budget while travelling can be a challenge. Understandably, you’ll likely feel a bit light and happy when travelling so it can be a lot easier to spend more than you actually intend to.

Fortunately, with a prepaid card, you can still put a limit to your spending as you have the option to limit your spending to the amount that’s available in your card. Unlike when you use a credit card where the balance can seem infinite, you are more in charge of your spending when you use a prepaid card.

It can be used as a buffer for your other accounts. If you’re not very comfortable about using your credit or debit card on your trip, taking your international prepaid card with you is one of the best options you have at your disposal.

Come to think of it, when a shady character gains access to your credit or debit card, they might also be able to put your checking or savings account at risk. It is also possible that they’ll be able to compromise any of your personal information. Thankfully, when you use an international prepaid card, the risk is way lower.

It can help protect you from fraud. Many international prepaid cards nowadays offer almost the same level of protection other plastic cards offer in terms of fraud protection. This means that if anyone uses your card without your permission, your liability will remain at a certain amount given that you report the incident within 2 business days.

Other international prepaid cards go above and beyond and provide zero-liability that prevents cardholders from losing money even if the incident is not reported before the charges show up on the account.

Prepaid Cards: The Viable Alternative to Bank Accounts

If you’re not familiar, you can easily mistake the best prepaid cards for other plastic cards. This is not surprising however since prepaid cards share a lot of surface similarities with credit or debit cards.

In addition, the best prepaid cards also share some of the features that make other plastic cards enticing. For instance, just like a debit or credit card, prepaid cards can be used to pay for hotel reservations, car rentals, hotel bookings, and other online purchases.

What’s even better is obtaining a prepaid card is easy and hassle-free. In fact, even if your credit standing is less than desirable, you can still easily get your hands on a prepaid card if you so wish.

Best Bank Account Alternative

A whopping 68 million people don’t have access to a bank account. And that’s in the United States alone. Fortunately, thanks to prepaid cards, they can still perform some of the typical transactions other people with bank accounts or other plastic cards can do like purchase transactions (online and through merchants) as well as ATM withdrawals.

How Prepaid Cards Work

Before a prepaid card can be used for any transactions, money has to be loaded onto the card first. Purchase transactions as well as ATM withdrawals you can do will depend on the balance available on the card. The amount of purchase transactions and withdrawals will also be deducted directly from the balance that’s available on the card.

That means if the amount of your purchase or withdrawal is greater than the balance available on the card, your transaction will be declined. If the balance is insufficient for your transactions or if your balance has been fully depleted, you need to load money onto the card before you can use it again.

Managing your prepaid card is more similar to managing your checking or savings account than managing a credit or debit card. Just like a savings account, you won’t have to worry about finance charges, late payments, due dates, or minimum monthly payments when using your prepaid card.

Also, unlike credit cards, you don’t have the option to “borrow” money from the issuer. Your spending limit is limited to whatever balance is available on your card. When you use a prepaid card, you are also spared from revolving debt balance, costly interests and charges, and putting your credit score at risk.

In some ways, prepaid cards also resemble debit cards since all transactions are deducted from the available balance. Any amount spent or withdrawn is not deducted from any bank account but from the available balance on the card.

Ideal Prepaid Card Users

Prepaid cards are ideal for many people especially those who have no access to banks. For instance, parents who want to teach their children how to manage their money accordingly use prepaid cards. Some parents provide prepaid cards to their children and load whatever money they need on the card so they also won’t have to carry physical cash with them.

Those individuals with bad credit can also get their hands on a prepaid card if they want as their credit standing won’t be looked into. In addition, a prepaid card is the best option for those who don’t want to put up with the hassle associated with bank account or credit card applications.

When you apply for a prepaid card, you are not required to submit any financial or confidential information. This is especially helpful if you don’t want to put any of your financial or personal information at risk of getting compromised. Also, if you’ve made financial mistakes in the past like not paying your credit card bills on time, your chances of getting a card is slim to none.

Choosing The Best Prepaid Card: Key Things You Should Consider

Over the years, the best prepaid cards have experienced a massive growth explosion. In fact, a Pew survey indicated that usage of prepaid cards rose by as much as 50 percent between 2012 and 2014.

Since they were first introduced, thebest prepaid cards have evolved into a convenient payment method for those who don’t have access to banks. It has also become a great alternative to traditional bank accounts among millennials.

What are prepaid cards?

Prepaid cards look very similar to debit and credit cards. However, unlike debit cards, it is not connected to any bank account and it needs to be preloaded with money before it can be used. Also, unlike credit cards, you will not be “borrowing” money from the issuer. Instead, you will be using your very own money, the one you preloaded in the card.

Gift cards are also considered prepaid cards. However, they are only designed for one time use. Reloadable prepaid cards on the other hand are designed for continuous use, given of course that there is money available on the card. The good thing is there are several convenient ways to load money onto the prepaid card.

How are prepaid cards used?

Prepaid cards can be used for merchant as well as online purchases. Oftentimes, prepaid cards are also affiliated with established payment networks. That being said, the cards are often honoured and accepted in places associated with he payment networks.

Each time the prepaid card is used, the amount of the purchase or withdrawal will be deducted from the balance that’s available on the card. In other words, you can’t spend more than the amount that’s available in the card. If the amount available is not sufficient to cover the expenses, the transaction will be declined.

Unknown to many, prepaid cards can also be used for ATM withdrawals and not just purchase transactions. To use the prepaid card for ATM withdrawals, a personal identification number (PIN) is needed.

How are prepaid cards different from credit cards?

While both cards can be used for purchase transactions and ATM withdrawals, they have several distinct differences. For instance, a prepaid card will require users to preload money on the account before it can be used while a credit card will allow you to “borrow” money for purchase transactions which you need to repay at an agreed time.

Since credit cards are considered a loan, the statement balance and the credit history are reported to major consumer credit bureaus. Transactions using the prepaid card on the other hand will not be reported.

What key things should you consider when choosing a prepaid card?

When looking for a prepaid card, you need to first identify how you will use it. For instance, do you intend to reload it through direct deposits or through reload networks? If you pick the latter, then it would be wise to pick a card with a reload network that’s convenient for you to go to. When choosing a prepaid card, you also need to consider if you’re going to use it for online payments and ATM withdrawals.

Another key thing you need to look into is the fees and charges. In line with this, you also need to consider how you intend to use the card. Understandably, you’d want to keep your fee payments to a minimum. That being said, look for prepaid cards that will charge you less for transactions you frequently do.

For instance, if you intend to use your cards for ATM withdrawals, consider it best to opt for a prepaid card that waives ATM fees when the cards are used at certain networks. Other prepaid card issuers will also waive monthly fees for cardholders who load a specific amount monthly.

The Amazing Prepaid Cards: What are Some of Their Unbeatable Benefits?

Nowadays, the best prepaid cards have become one of the most preferred financial tools by many people. Aside from the fact that they’re very easy to obtain (read: no financial and background checks needed), using them is both straightforward and effortless.

In essence, the best prepaid cards combines a lot of the amazing features of debit and credit cards in one card. That being said, it’s not surprising many people confuse them with other plastic cards as they look almost identical—there’s a card number, signature stripe at the back, and logo, among others.

However, apart from the fact that they’re not linked to any bank account, prepaid cards don’t come with a line of credit. They are not also linked to any checking accounts. To reload money on the card, users have diverse options depending on the cards they’re using.

Prepaid Card Basics 

There are two primary types of prepaid cards: reloadable and non-reloadable. Just like debit and credit cards, prepaid cards can also come with fees. However, they are often way less compared to debit and credit cards. Prior to picking a prepaid card, consider it best to check any of the possible fees if they are to your liking.

In most cases, prepaid cards don’t come with monthly or annual usage fees. However, it would be best to check for ATM withdrawal fees or purchase and reload fees if there are any. The issuers are the ones who decide the fees for transactions done using the card. Ensure you do your own due diligence so you can use the card to your full advantage.

If safety and security is a priority for you, you’d be happy to know carrying your prepaid card with you is a lot easier (and safer) than carrying cash. In case of loss or theft, you can always have the card blocked so your balance is not compromised. Oftentimes, you also have the option to request for a replacement.

Not only that, any ATM withdrawals done using the card is protected by a secure PIN that only you know. Some issuers also go the extra mile by transferring the balance from the lost card to the new one so things are more convenient for the cardholders.

Prepaid Cards: Peerless and Unbeatable Benefits

If you’re considering getting a prepaid card, below are some of the unbeatable benefits you stand to gain:

Ideal for easy management of money. If you want to better manage your money, it’s a lot easier with a prepaid card. Since your spending is limited to the balance that’s available on the card, you can easily control your spending and not spend more than you are supposed to. What’s even better is you can also easily monitor your spending online and keep track of all your transactions.

It provides security. As mentioned earlier, using a prepaid card is way safer than carrying loads of cash with you. And since the card is not linked to your savings or checking account, you won’t be compromising the security of your account or any of your personal and confidential data.

It can be used for online purchases. Just like debit and credit cards, prepaid cards can also be used for online purchases. This is a big relief for many who would like to avoid all the hassles associated with shopping in malls.

Also, when you use your prepaid card for purchase transactions online, you will not only be able to save money that would otherwise go to gas for your car and other miscellaneous expenses, you can also get everything done with just a few mouse clicks. All your purchase transactions are done within minutes, without leaving the comfort of your home or office.

Answers to the Top 5 Questions About Prepaid Cards

Over the years, the best prepaid cards have become one of the most trusted ways to make purchases both in stores and online. They are also considered as the ideal travel companion for those who travel outside the country on a consistent level.

While the best prepaid cards can share many surface similarities with credit and debit cards, they have distinct differences. For starters, prepaid cards need to be loaded with a predetermined amount before it can be used for purchase transactions or ATM withdrawals.

If you’re like many people, you’re probably considering getting a prepaid card or you’re considering getting one. However, do you know how to use your prepaid card to its full advantage? Start by getting to know the basics of your prepaid card.

Below are 5 of the top questions about prepaid cards and the answers to them:

Question No. 1: Are there regulations that apply to prepaid cards?

Regulations that apply to prepaid cards can differ based on where you live and the issuer of the cards. However, for prepaid cards that are provided by federally regulated financial institutions, they are covered in the Prepaid Payment Products Regulations.

As a general rule of thumb, consider it best to check all there is to know about the prepaid card before deciding which one to pick. Nowadays, most prepaid cards already have websites you can check. Make sure you do your due diligence and find out all there is to know about a prepaid card you’re considering.

Question No. 2: Do you have to pay for an activation fee? How much is it?

Some issuers of prepaid cards can charge users with an activation fee before the card can be used. However, the fees will depend on the issuer and the prepaid card chosen. In some cases, prepaid cardholders are charged depending on the card’s value or a pre-set rate might be associated with the card.

Question No. 3: Do prepaid cards have expiry dates?

Most prepaid cards don’t have expiry dates unless they are distributed as promotional cards. Depending on the issuer, a prepaid card might have an expiry date. However, you can always check with the issuer if there is an expiry and verify with them if there are any fees should you want a renewal card.

Question No. 4: What other fees apply to my prepaid card?

In most cases, the fees are determined by the issuer. In other cases, it will depend on the features of the prepaid card. For instance, prepaid cardholders can be charged a minimal fee when checking their balance, customising the card, reloading money onto the card, purchasing goods and services online, and replacing stolen or lost cards.

Also, it would be wise to check with your prepaid card issuer if you are required to pay an amount should you decide to cancel your card. Other prepaid card issuers might also charge cardholders if their card has stayed dormant for a long period to cover overdraft or monthly maintenance. In line with this, consider it best to go over and review the fees that apply to your chosen prepaid card.

Question No. 5: What happens if my prepaid card gets lost or stolen?

In the event that your prepaid card gets lost or stolen, you are advised to report the incident immediately to your card issuers. In most cases, prepaid card issuers will transfer whatever balance is left on the stolen or lost card to the new one. While you’re at it, consider it best to also check with your issuer if there are additional fees you are required to pay to replace the lost or stolen card.