(Newswire.net — January 18, 2019) — Prepaid credit cards are less common than regular debit bank cards. The amount on a prepaid credit card is only exactly what you put on it, so it is very similar to a banking system. Many consumers overlook prepaid cards because they are unaware of the benefits that can be claimed by using them.
There are many advantages to using prepaid debit cards ranging from the ability to use in most retailers, to their money management aid. Since there are many aspects of prepaid debit cards, and there are even somethings those with one may not know about them. Here are the 8 most important things you should know about prepaid debit cards before purchasing.
1. Payment Restrictions
Prepaid cards are not the same as gift cards that can only be used in certain places. However, these cards still go through Visa or Mastercard so regular card limits will still apply. You will notice that you cannot do functions that require a money hold to be placed on the card. This can occur at rental car businesses, or even while getting gas at the pump directly. If you do not commonly use these services, it is not an issue that they are excluded.
2. Limit Losses, Gain Lenders
Since you can load a prepaid card with only the exact amount you need at a time you can limit losses if the card is lost or stolen. Cash can also be an invitation to theft where a card will conceal the amount you’re carrying.
Debit cards can also be used to secure a certain type of loans that require a debit/credit card. The process of receiving a payday loan with a prepaid debit card is a lot simpler than one would think, and can really come in handy when life’s little money problems occur.
3. Overdraft Protection
Since prepaid cards only have the exact amount of money you put on them, you will not be able to overdraft. Overdrafting comes with expensive fees when you’re already low on funds. Sometimes it is better to have no option to overdraft so you avoid all of these fees that come with it in a traditional bank.
4. Endless Uses
Prepaid can be purchased in most retail stores, usually among the gift cards. Their accessibility makes it very handy to buy one within minutes and this adds to the variety of uses they have. For instance, no one prefers to buy a last minute gift, but if you are in search, a prepaid debit card is more secure than gifting cash.
Prepaid debit cards are also great for online purchases to protect your banking information. The amount of websites that collect your information is alarming and you must make smart online shopping decisions.
Another common use is for budgeting. They are even useful if you do not have good credit to get a bank account or credit card.
5. No Credit Required
Bank accounts do perform a type of credit check, and there are many cases where you can not be approved for a checking or savings account because of prior financial history. With prepaid debit cards, they perform no credit check and you are guaranteed these benefits of keeping money on a usable card.
At the same time, this means that these cards will not affect your credit with their use. This is good and bad quality. Many people want to build their credit, and with a prepaid debit card, this cannot be done. Others who do not want their credit going sour because of a few choice purchasing decisions will like that the card does not touch credit scores.
6. Helps Budgeting
Since the amount you can withdraw from a prepaid card depends on the amount you put on it. If there is an important payment you can’t miss, you can load a prepaid card with the exact amount you’ll need to stay safe. Designating certain cards for certain things is a good way to budget your spending and put aside money where you need it.
7. Can Prevent Unwanted Recurring Payments
Sometimes in order to use a service, you will need to pay a subscription cost, only to find next month you hadn’t canceled your subscription properly and are charged again. Using a prepaid card with a limited amount of money on it is a good way to ensure there is not an unexpected payment. Not expecting recurring payments is one of the leading causes of overdraft and it can help you pinpoint your extraneous subscriptions.
8. Children’s Allowance
Prepaid cards are a good way to teach your children about responsibility with money while getting accustomed to a limited account. You can easily load the right amount for your child to go to an activity with friends or use for school lunch money. A prepaid debit card may seem a little extensive to buy for a child, but cash can easily be lost. Also, the debit card can be protected by a pin to defend against the card becoming lost or stolen.
When there is a set amount on this card, a child can use it and even implement their own budgeting and saving. There are ways to even set up automatic deposits into the linked prepaid debit card account.
Prepaid Debit for Everyday Consumers
Deciding if a prepaid debit card will fit your lifestyle is all about examining your spending habits. A prepaid card has the ability to help organize your funds and save you money in the process. It is easy to establish an account and can be convenient to have if you do not qualify for a traditional banking account.
The variety of uses and the ease of access can prove beneficial for everyday purchases and large unsecured buys online. Most do have much information on prepaid debit cards and this vital knowledge can help you see the many benefits and interesting facts about them.