Simply put, the best prepaid cards are the ideal alternatives to carrying money around. You just load money onto the card and you can use it for purchase transactions and ATM withdrawals instantly.
If you are considering using prepaid cards but don’t know much about it, you’ll find all you need to know about this amazing financial tool in this article.
Prepaid Cards: Answers to Frequently Asked Questions
Are there different kinds of prepaid cards?
Basically, there are two different types of prepaid cards: single-use (non-reloadable) and reusable (reloadable) cards. Rebate cards, incentive cards, promotional cards, and gift cards are some classic examples of non-reloadable cards.
In other words, you only get to use them one time and you won’t be able to use them for other transactions after.
The best prepaid cards on the other hand can be loaded and reloaded with money whenever you deem fit. That means you can also use it for purchase transactions and ATM withdrawals given that there is money available on the card.
How are prepaid cards different from gift cards?
Unlike prepaid cards, gift cards come with a predetermined amount of money loaded onto them. It also cannot be reloaded once the balance on the card has all been used up. Gift cards are also usually designed to be given as gifts.
On the other hand, you can use your prepaid card as many times as you want as long as there is balance available on the card. Once you deplete all the money on the card, you have the option to load money onto it so you can use it again.
Can prepaid cards help me build credit?
Prepaid cards won’t help you build your credit as you are not borrowing and repaying money. If anything, all you’re doing is accessing the money that you have loaded to the card.
To build credit, you need to borrow money and pay it back. The creditor also has to report your payment record to major credit reporting agencies.
How can I choose a prepaid card that suits my needs best?
Since there are various prepaid cards to choose from nowadays, you need to do some research before diving in. Fortunately, a quick Google search can already give you an idea if the card you are considering suits your needs and your lifestyle.
For instance, if you want a prepaid card you can use to shop online, it makes sense to get a card that will require a per-use purchase fee as opposed to a monthly fee.
However, if you use your prepaid card similar to a debit card, it would be ideal to go for one with a low monthly fee. It would also be a good idea to see if you can qualify for a fee waiver.
How can prepaid cards help me manage my money?
Nowadays, even those individuals who have access to banks are using prepaid cards, thanks to all the amazing benefits they offer. One thing many people love about prepaid cards is the fact that it is a great and effective budgeting tool.
Some prepaid cardholders use different cards for various purposes. For instance, grocery money for the month is loaded on one prepaid card while the budget for food is loaded on another.
As soon as the balance on the card has been depleted, they will wait until the end of the month until they load money onto the card again.
In a way, prepaid cards can effectively help you manage your spending since your transactions (purchases and ATM withdrawals) will be limited by the balance that’s available on the card.
Once the balance has been depleted, your spending also stops automatically.