A Guide To Prepaid Cards

Since the economic downturn prepaid cards have gained considerable popularity. Worried about sitting on expensive credit, consumers are taking to the prepaid card’s more controlled and manageable approach to finances. This article will introduce you to the basics of using this card.

What Is a Prepaid Card?

In all likelihood, you have used a prepaid card before. Top-up cards, electricity cards and store gift cards all fit into this category. The reason this type of card contrasts so strongly with a credit card is because you are making purchases with money that you already have, rather than money you are borrowing. In order to use a prepaid card, you simply load money from your current account onto it and spend it later. Note that a prepaid card is not linked to a bank account as its counterparts are, it is a separate entity that you must make transfers to.

Why Should I Choose a Prepaid Card?

There are many advantages to using a prepaid card rather than a credit or debit card. To start with, you will find that your money is far more manageable and you will be more disciplined with your spending. Knowing that you can just ‘deal with the cost later’ can get you into a lot of debt. A prepaid card is uncomplicated, and is often used by people overseas if their credit cards do not work or if they have problems getting one. You do not have to pay interest because you are not borrowing, and therefore you can avoid credit checks.

However, be aware that not all places accept prepaid cards, particularly the USA. You should also note that credit cards usually offer consumer protection with insurance; you will not gain these benefits with a prepaid card. Perhaps the biggest catch with prepaid cards is that you will be charged for the application, cash withdrawals and if you go over your loading limit.

How Do I Use a Prepaid Card?

It is possible to make regular payments from a prepaid card just as you would with a credit or debit card, and this can be done in the same way as you would with its counterparts (contact your bank for more details). It is advisable to set up a direct debit into your prepaid card so you do not miss payments.

If you wish to load money onto your prepaid card, you must either visit your bank branch, do it online, or in a Post Office (if you see a Paypoint symbol). It usually involves a simple transfer but it will differ depending on the issuer. Some issuers may give you an online account for your card, but these may have fees attached to them.