Also commonly referred to as general purpose reloadable cards, prepaid cards have truly come a long way. Nowadays, we even have international prepaid cards, an awesome financial tool that can be used when you travel outside the country.
In a way, prepaid cards work similar to prepaid cards or debit cards. However, prepaid cards have one distinct difference—they are not connected to any savings or checking accounts.
Instead, money has to be loaded onto the card before it can be used for purchase transactions or ATM withdrawals.
In 2016, the Consumer Financial Protection Bureau (CFPB) issued consumer protections for prepaid card users. It went into effect last April of 2019. The consumer protections were created to change the prepaid card consumer protections for the past decade.
Prior to the CFPB rule, prepaid card providers were not required to give consumers fee disclosures, protection from unauthorised transactions and loss, and free access to their account information.
Fortunately, many prepaid card providers voluntarily provide some protections already. Robust protection is just one of the amazing benefits prepaid card offers. No wonder they have grown in popularity over the years.
Need proof? In 2016 alone, Americans spent a whopping $557 billion using their prepaid cards! This accounted for 9 percent of all prepaid card purchases made through merchants.
Get Your Hands on the Best Prepaid Card: Key Factors to Consider
If you’re considering getting a prepaid card or an international prepaid card, below are some the fundamental factors you need to take into account:
Is it what you really need?
If you don’t like checking accounts because of the balance requirements or the exorbitant transaction fees, a prepaid card can be your most amazing alternative.
If you also find it hard to stay within the monthly budget you’ve set, you’d find prepaid cards to be of tremendous value.
If you wish, you can have one card for groceries, gas, shopping, etc. Once you’ve depleted the balance for each, you have the option to wait for the month to end before you load money onto the card again.
This can help ensure you stay within the monthly budget and not spend more than you are supposed to or can afford to.
There are also other smart uses for prepaid cards. For instance, many parents have been using it to teach their children how to manage their money accordingly.
Prepaid cards can also be a good gift option instead of a gift card because it offers better loss and liability protections and has a more vast acceptance to boot.
What are the terms, fees, and conditions?
Look into these three primary components as they can differ from one issuer to another. You also need to compare terms laid out as not all prepaid card providers have the same terms and conditions.
If the fees you’ll likely pay is a priority for you, it is crucial to also look into other possible fees and charges you’re likely to incur. For instance:
● Monthly fees
● Purchase fees
● Balance inquiry fees
● Point of sale transaction fees
● ATM withdrawal fees
● Loading fees
● Dormancy fees
● Fees when you add or load money onto your card
Is it easy and convenient to use for purchases?
Using prepaid cards for purchase transactions is similar in a way to using a debit card. You can use it for purchase transactions and ATM withdrawals just like you would a credit or debit card.
The primary difference is you will be using your own money and not that of the bank.
Also, depending on the features available, your chosen prepaid card might come with other enticing options like online bill payments and free cash withdrawals at in-network ATMs.
Finding the best prepaid card that will suit your needs is no easy feat. However, as long as you know what your priorities are and what to look for, picking the right prepaid card should be a walk in the park!