What to Consider When Choosing a Prepaid Card

Over the years, the best prepaid cards have earned quite a following. This is not exactly surprising as the best prepaid cards come with peerless benefits that are truly hard to miss. In 2015 alone, more than half of Americans purchased prepaid cards for personal use. That’s a massive rise compared to just 19 percent in 2008. 

If you’re considering getting a prepaid card but unsure if it’s the right fit for you, you’ve come to the right place. This article will cover all you need to know about prepaid cards so you gauge if it’s the best option for you and you will know what to consider when getting one.

Prepaid cards work more like a debit card than a credit card.

While prepaid cards look just like the typical debit or credit cards, they are actually very different in terms of features. Unlike credit cards where the bank will have to pay for your purchases first, with prepaid cards, you will be spending your own money. Also, unlike debit cards, your prepaid card is not connected to any bank account.

The great thing about prepaid cards is you can also use them for purchase transactions and ATM withdrawals just like you would when you’re using a credit or debit card. Prepaid cards are also often backed by major financial institutions so they are accepted and honored by many merchants the world over.

Your prepaid card can also be used for online purchases. This is one thing many people find really inviting. After all, it spares them from all the hassles associated with going to the malls, braving the traffic, and dealing with fellow shoppers and sales clerks.

Prepaid cards can be a great alternative to banks.

If you don’t like dealing with banks or would like to avoid the hassles associated with it, prepaid cards can be a wonderful alternative you can look into. In the United States alone, a whopping 68 million people have no checking account. Fortunately, they can use prepaid cards as an alternative. 

What makes prepaid cards a truly enticing alternative is how easy they are to obtain. Unlike prepaid and debit cards where you have to submit financial documents and personal information and subject yourself to credit and background checks, prepaid cards are straightforward to get. No credit and background checks and no need to submit any financial documents or personal information!

They can help you manage your money accordingly.

If money management is a challenge for you, you are not alone. Many people also find it extremely difficult to manage their money accordingly and stay on top of their spending. Fortunately, prepaid cards can be your most powerful and helpful ally. For starters, all the transactions you will do using your card is deducted directly from the balance available.

When using credit cards, you can do purchase transactions and carry out ATM withdrawals while “borrowing” money from the bank. In other words, the bank pays for the purchases first and you’ll have to pay the bank at a later date plus interest. The unfortunate thing is it’s easy for you to spend even if you are not allowed to or can afford to.

With a prepaid card, all the spending will be deducted from your balance in real-time. Once the available balance on the card has been depleted, the spending also stops. You won’t also be able to do any transactions if the balance on the card is already zero. You however have the option to load money onto the card so you can use it again for whatever transactions you have in mind.

New to Prepaid Cards? Your Basic Introduction

Through the years, prepaid cards have become widely popular. A Pew survey even indicated that prepaid card use from 2012 to 2014 increased by as much as 50 percent. From the time they were first introduced, prepaid cards have truly come a long way. Nowadays, it has evolved into one of the most preferred payment options available.

What are Prepaid Cards? Here’s All You Need to Know!

If you are reading this, it is likely that you are considering getting a prepaid card. Or maybe you may already have one but don’t know how to use it fully yet. Fortunately, you’ve come to the right place. This article can serve as your short but comprehensive guide to one of the best financial tools you can get your hands on.

What are Prepaid Cards

Prepaid cards look no different than the typical credit and debit cards. However, unlike the two, prepaid cards are not linked to any bank account. They also need to be preloaded with money before they can be used for ATM withdrawals and purchase transactions. 

In addition, unlike prepaid cards, you won’t be “borrowing” money from the bank when you use it. With credit cards, the bank pays for your purchases first and you’ll just pay the bank at a specified date. With a prepaid card, you will be using your own money—the balance that’s available on the card.

Many people mistake prepaid cards for gift cards. While they do have certain similarities, they are actually two separate and distinct financial tools. Unlike prepaid cards, gift cards are designed for one-time use only. In other words, once the balance available on the gift card has been depleted, you won’t be able to load money onto it or use it again.

How to Use Your Prepaid Cards

Just like debit and credit cards, prepaid cards can also be used for online and merchant transactions. And unlike gift cards, prepaid cards can be used to withdraw money. Prepaid cards are typically affiliated with established financial networks. That means, they are also honoured and accepted in establishments associated with the financial network.

Each time your prepaid card is used, the money is deducted directly from the balance that’s available on the card. If the balance is not enough to pay for a specific purchase, the transaction will be declined. Also, if the balance available on the card has been depleted, you have the option to load money onto your card at any time you deem convenient.

The frequency of the loading will also depend on what’s convenient for you. You can load money, weekly, monthly, or quarterly, whichever suits your needs. You even have the option to load money on the card daily if you want to!

What to Consider When Choosing a Prepaid Card

Nowadays, there’s no shortage of prepaid cards you can choose from, that picking the one that’s best for you has become quite challenging. Fortunately, you can narrow down your options by asking yourself a few key questions about your possible use of the card. For instance, it is more convenient to load money through direct deposits or through network reloads?

If you prefer the latter, it would be ideal to pick a prepaid card whose reload network is easy for you to go to. Another important factor you should take into account are the fees and charges. In line with this, examine the transactions you often do using your prepaid card.

Take note of the patterns you’ll notice in terms of card use and identify those transactions you perform more often. Understandably, it would be best to choose a prepaid card that charges less for those transactions you perform often.