Prepaid cards are like checking accounts, except they don’t require a bank account. The best prepaid cards can be used anywhere credit or debit cards are accepted. The prepaid can can also work similar to cash when used for online purchases and transactions.
The best prepaid cards can be used for purchase transactions and ATM withdrawals. They are honoured where most credit cards are accepted, just like a regular card. Before the best prepaid debit or money market accounts can be used, money needs to be loaded on the account first.
Just like other financial products such as credits and checking accounts (online banking), many types of prepaid services/products need to have some funds deposited so you can use it successfully.
Prepaid cards have a check-like structure in that any amount spent or withdrawn from the card will be deducted from its balance. In addition, prepaid cardholders won’t spend beyond what’s on their card and it’ll function just like a checking account would.
Prepaid cards are not a new concept and they have been around for quite some time. However, unlike credit or debit cards which use your money in the bank to pay with them when you make purchases at stores, prepaid cardholders can only spend what’s on their card itself.
Prepaid Cards: Quick Facts You Should Know
If you are considering getting this amazing financial tool, below are some quick facts you need to know:
- Prepaid cards are beneficial for those who don’t have access to banks or minimal knowledge about how they work. This includes people without bank accounts, young adults with low credit scores and immigrants looking for an alternative option than traditional banking methods.
- Prepaid cards can also be a great option for people who do not have access to traditional banking services or those individuals who are locked out of the system because they have poor credit scores.
- Those who enjoy gift cards would be thrilled to know prepaid ones are much better because they have beneficial features. For instance, some prepaid cards come with protection in the event of loss or theft.
- Prepaid cards are different from gift cards. Unlike traditional store-specific gift cards, prepaid credit and debit cards can be used both online and in stores to pay for goods or services, withdraw money from an ATM machine (at a fee), and receive direct deposits of income into the account linked with it.
- To make it easier for you to pick the best prepaid card, consider analyzing your spending habits first. For example, if you frequently exceed transaction limits with a certain type of purchase then choose a prepaid card that will waive fees when this happens.
- When you are looking for a prepaid card, make sure the structure is easy to understand. Some providers use flat-free models while others charge users for most transactions. Analyse your monthly activity so it’s a lot easier for you to figure out which option is best for you.
- Prepaid cards have been increasing in popularity since they offer a number of benefits to consumers. In fact, experts predict that the industry will continue growing at an average rate of 22 percent annually from 2015-2020 and also project total amounts loaded onto prepaid cards by 2020 reaching $116 billion.
- When paying for online services or products, cash is not always an option. Luckily, prepaid cards can be used to pay digitally instead of using a check card at the ATM. Prepaid cards are also great because they don’t expire and have other perks like being able to withdraw money from ATMs if needed.