Nowadays, credit cards have become an essential commodity for everyone. Most people opt for a prepaid credit card because it is an effective way to manage money. Unlike regular credit cards, you can set a limit for your budget when using a prepaid card, thus avoiding overspending.
Additionally, prepaid cards are less risky because you’re technically using the money you already have. But do you know everything about prepaid cards, or you’re only using them because your friends are using them, too?
Regardless of the reason, you’re making the right decision of using prepaid cards. If you’re interested to know more, this article could answer the frequently asked questions about prepaid cards.
How do prepaid cards work?
Unlike other credit or debit cards that are linked to a bank account, prepaid cards are much easier to get. You can even buy them from the mall or supermarket. Like gift cards, you can load money onto the card and use it for your purchases.
There are many ways to load money into your cards, such as direct deposit, register cash in selected retailers, or transfer from your savings account through the bank’s mobile app. You may prefer to do the latter because it is by far the most convenient and you can load money wherever you are.
Aside from using prepaid cards to purchase from their partner stores, you can also use them for paying your bills. They are very convenient because they are widely accepted, as long as they are backed by MasterCard, Visa, or American Express.
Why are prepaid cards better?
Although there might be a few drawbacks to using prepaid cards, such as not being able to use them when you’ve run out of load, its advantages still outweigh the disadvantages.
- Alternative to banks
As mentioned, prepaid cards are much easier to acquire than ATM cards from banks. Moreover, they don’t require a long process of applying for a savings account. They are also very versatile and popular in many households.
The uses of prepaid cards are almost endless. You can use them for online shopping, booking a hotel room, buying plane tickets, and more.
- A credit score is not required.
If you’ve been struggling with credit issues, you can easily use a prepaid credit card as an alternative. Although it won’t add up to your credit score, it also does not check and require your credit status, making it accessible for everyone.
- Many options to reload
Similar to debit cards, you’re using preloaded money on your prepaid card. However, you would need to go directly to the nearest bank branch to deposit money in some debit cards. But in prepaid cards, you can quickly reload them, making them perfect for emergency use.
- Better money management
A prepaid card helps you manage your budget better because you only have a finite number on your account that would eventually run out if you constantly use them. Therefore, it would make you more cautious of spending.
Even if huge banks’ prepaid cards are not directly issued, you can still guarantee that you are protected, especially if MasterCard or Visa notes it. Prepaid cards work with less risk and more protection.
Prepaid cards are perfect for everyone because they are a great alternative to bank cards, don’t require credit, are easily reloadable, are helpful for money management, and provide protection. Further, using a prepaid credit card is very simple. It is also an effective tool to better teach your children the importance of budget and independence if you’re a parent.
Ester Adams is a farmer of words in the field of creativity. She is an experienced independent content writer with a demonstrated history of working in the writing and editing industry. She is a multi-niche content chef who loves cooking new things.