Over the years, the world has become more and more connected. Not only that, the use of plastic cards has also become very common. Case in point: transactions requiring cash payments before such as hotel reservations, utility bills, and car rentals can now be done using debit, credit, and prepaid cards.
Of the three plastic cards, prepaid cards are considered the most recent addition to today’s list of innovative financial tools. Not only that, prepaid cards are also the most easy to obtain and the most convenient to use. If you are considering getting prepaid cards, below are the answers to frequently asked questions about prepaid cards:
Prepaid Cards: Answers to Frequently Asked Questions
Frequently Asked Question #01: What Makes Prepaid Cards Different from Others?
Prepaid cards have several surface similarities with other plastic cards that many people would mistake one for the other. However, while prepaid cards look like credit and debit cards, they have one massive feature that makes them different from other plastic cards.
Unlike other plastic cards, prepaid cards are not linked to any bank account. Also, as the name suggests, money has to be loaded onto the prepaid card first before it can be used for purchase transactions and ATM withdrawals. Unlike credit cards, prepaid cards don’t have any credit capabilities.
This means you can’t use your prepaid card for the time being once the balance has been depleted. Fortunately, loading money onto your prepaid card is easy and straightforward. Once you have successfully loaded money onto your card, you can use it right away.
Essentially, when you use prepaid cards, you would be using your own money rather than borrowing money from the bank. Each time you use your card for transactions, the amount will be deducted directly from the balance that’s available on your card.
Frequently Asked Question #02: Are There Different Types of Prepaid Cards?
As the popularity of prepaid cards grew, different types were introduced to cater to the various needs of customers. Case in point: general purpose reloadable cards or GPRs have become an option for the unbanked and underbanked. Payroll cards, employee incentive cards, and government benefit cards have also become widely popular.
Many government agencies and organisations have been using prepaid cards to provide salaries and incentives rather than providing conventional options such as direct deposit payments and checks.
Frequently Asked Question #03: What are Some of the Benefits of Using Prepaid Cards?
Apart from being a great tool for those who don’t have access to banks, prepaid cards provide many other enticing benefits. For starters, obtaining a prepaid card is easy and straightforward. You won’t have to go through time-consuming credit and background checks.
Also, if you want to curb overspending, prepaid cards can help. Since they don’t come with credit capabilities, it becomes a lot easier for you to manage your money and your spending. In addition, you also won’t need to deal with mounting debts since you are spending your own money.
With prepaid cards, you are also spared from paying those ridiculously high interests, fees, and other charges. If you are still building your credit history or your credit history is not that good, you can still get access to a prepaid card. Not only is the card easy to obtain, it also has many exciting features common in other plastic cards.
As mentioned earlier, when you use credit cards, you will be using your own money. That said, as soon as the balance has been depleted, all transactions will be depleted until such time that you are able to load money onto your card again.