If you are considering getting a prepaid card, you are not alone. In fact, in 2015, more than half of Americans obtained a prepaid card. Statistics provided by Synergistics Research Corporation revealed this is a huge spike in usage, taking into account the fact that only 19 percent used prepaid cards way back in 2008.
At the moment, at least more than a dozen prepaid cards are already available in the market. If you are considering getting one, here are some of the basics you need to know:
They are similar to debit cards.
While it’s easy to mistake a prepaid card for a credit card, there is actually one huge difference—prepaid cards don’t come with credit capabilities. If truth be told, prepaid cards are actually more identical to debit cards in terms of usage. In other words, when you use a prepaid card, you will spend your own money and not that of the bank.
Unlike the conventional debit card however, you are not required to have a bank account to be able to use your prepaid card. All you have to do is load money directly onto your card and you can already use it for ATM withdrawals as well as retail and online transactions.
Once you deplete the balance in the card, you won’t be able to use it until you have loaded money onto the card again.
They have diverse features.
Prepaid cards that are currently available in the market are designed with one common aim in mind—cater to the diverse needs of cardholders. That being said, prepaid cards often come equipped with peerless features that offer unmatched convenience and ease for users.
Case in point, some issuers allow cardholders to pay their bills online using their prepaid cards. Some even have the option to set up automatic monthly payments. Others also allow payments through electronic checks as well as ATM withdrawals using a designated PIN.
Some prepaid cards also allow cardholders to manage their transactions online or through a mobile app. Statistics show that at least 70 percent of prepaid cardholders check their balances and transaction history using their phones. Other issuers offer added ease by sending out text alerts to users.
They are amazing money management tools.
Even people who have access to regular bank accounts can use prepaid cards as a highly effective money management tool. For instance, some load their grocery allocation for the week or month onto the card and use it strictly for purchase of grocery items. Once the balance has been depleted, the spending stops automatically as well.
They won’t require credit.
Prepaid cards are considered the consummate alternative for those individuals with non-existent and undesirable credit histories. In addition, prepaid cards are also deemed the ideal option for those who can’t manage their credit card spending accordingly.
Since you can’t spend beyond your means when using a prepaid card, it is without doubt a very effective tool for those who are trying to manage their finances accordingly and those who are recovering from debt.