Prepaid Card: Get to Know the Different Types

prepaid cards in Singapore

Over the years, a new amazing financial tool has been introduced to cater to the diverse payment needs of industry processes as well as customer segments. This awesome new financial tool is called the prepaid card.

Some of the many uses of prepaid cards include payroll processing, gifting, consumer transit, healthcare reimbursements, employee incentive processing, and government benefits disbursements.

Unbanked individuals who either have a poor credit history or are new to banking are also seen as one of the sectors that can benefit most from using prepaid cards. While unknown to many, there are different types of prepaid cards.

Discover the different types of prepaid cards as well as the essentials of this highly beneficial financial tool in this article.

Different Types of Prepaid Cards

Basically, there are 2 types of prepaid cards: single use or non-reloadable and reusable or reloadable cards.

Promotional cards, gift cards, incentive cards, and rebate cards are some of the most common examples of non-reloadable or single use prepaid cards. In other words, once the balance available in the card has been depleted, the card is considered useless.

In most cases, single use or non-reloadable prepaid cards are only honoured and accepted at single merchant or merchant chains. These types of cards are also typically not redeemable for cash. They are also not intended for international use.

A reloadable prepaid card on the other hand, as the name implies, allows cardholders to load and reload funds onto the card so it can be used over and over again. Some of the most common examples of reloadable prepaid cards include payroll cards and cards used for government benefits.

Single-purpose reloadable cards such as those used for public transits or used for purchases at Starbucks are classified as single-purpose reloadable cards. These types of cards can also be used to make everyday purchases. They can also be used to perform ATM withdrawals.

Reloadable Prepaid Cards versus Gift Cards

Typically, gift cards come with an amount that’s predetermined (i.e $25, $50, or $100). As mentioned earlier, once the balance available on the card has been depleted, cardholders can no longer reload money on the card.

Gift cards are also generally anonymous and are primarily given away as gifts. A reloadable prepaid card on the other hand is typically personalised. Unlike gift cards, reloadable prepaid cards also come with other amazing benefits and features that’s absent in the former.

Prepaid Cards versus Debit Cards

Unlike prepaid cards, debit cards are tied to a checking or other demand deposit accounts. That being said, bank debit cards also have different features as well as protection for their users.

Case in point: fraud and purchase protections as well as dispute resolution rights may not be the same between reloadable prepaid cards and debit cards. While protections offered are more robust for debit card users, reloadable prepaid cards are deemed more low risk.

Ideal Prepaid Card Users

While anybody can benefit from the reloadable prepaid card’s many exciting features, they are considered more attractive by individuals who don’t have access to credit or debit cards for one reason or another (bad credit history, no credit history, or those who are not comfortable dealing with banks).

Reloadable prepaid cards are designed to make paying as well as managing finances a lot easier for the unbanked as well as the underbanked. Why? They also allow cardholders to do direct deposits, online purchases, bill payments, as well as ATM withdrawals.

Reloadable prepaid cards are also considered ideal for those who would like to avoid accumulating debt, curb overspending, and would like to easily track and manage their spending.

What Makes Prepaid Cards Exceptionally Appealing

prepaid cards in Singapore

Initially, prepaid cards were promoted as a very convenient option for those who don’t have access to banks. It turns out, the best prepaid cards actually have a much broader appeal. In fact, a report from the Pew Charitable Trusts indicated that those who use the best prepaid cards have given up on other options.

Prepaid cards can also be used at any store that honours and accepts other plastic cards like credit and debit cards. Prepaid cards also provide cardholders easy access to ATMs in case they want to withdraw cash. There is also no need for credit checks when applying for one.

The Pew study also looked into the reasons prepaid cards have earned quite a following even among people who already have debit or credit cards. Primary, what they found out is many respondents believe they are able to control their finances better when they use a prepaid card.

Not only that, they also believe that using the best prepaid card spares them from paying those over the roof fees, interest, and monthly charges. Icing on top of the cake is they can credit a certain amount of money on the card and limit their spending to that amount alone.

While prepaid cards also have fees for certain transactions, they are undeniably way lesser compared to other plastic cards. No wonder many people consider them more economical. Some experts also claim that prepaid cards are universally less costly in terms of charges compared to its other counterparts.

The Exceptional and Undeniable Appeal of Prepaid Cards

Prepaid cards offer benefits that are hard to match. Some of the remarkable benefits they offer include:

No credit checks needed. This might not be common knowledge but banks run credit checks on every individual who applies for credit or debit cards. That means for those who have made grave financial mistakes in the past like issuing bouncing checks or not paying their bills on time, their chances of getting approved is very slim.

Fortunately, obtaining a prepaid card is as easy as can be. No credit checks are required and applicants won’t be asked to submit financial documents or personal data. People can also get as many prepaid cards as they want, depending on how many they think they need and they can all get them without any hassles or issues.

It’s an efficient budgeting tool. Going into debt can sometimes send people into a financial tailspin that might take years for them to recover from. For those who have a tendency to overspend, a prepaid card can be a very powerful tool. For many, the prepaid card is seen as a very effective and convenient way to manage money accordingly.

Those who don’t have access to banks, students who need quick access to cash but can’t get a credit card, and those parents who would like to teach their children proper money management skills all rely on prepaid cards to help them out.

With a prepaid card, spending also stops automatically as soon as the balance on the card has been depleted. That means you can limit your spending and just load money back on the card again whenever you deem fit.

You can use it to shop online. Online shopping has become a favourite of many and for good reason. For starters, online shopping allows you to purchase whatever it is that you want without having to leave your house or office.

All you have to do is visit the site you want to purchase items from, browse through all the available stocks, pick the one you want, pay for your purchase using your prepaid card, and just wait for the items to be delivered to your doorsteps. That’s convenience and ease you just can’t miss out on!