What are Prepaid Cards?
Prepaid cards – also known as prepaid credit cards and prepaid debit cards – are similar to credit cards in appearance and can be used for making purchases or withdrawing money at an ATM. Online shopping usually requires a credit card which can be a problem for consumer who do not have access to credit, however, with a prepaid card shopping online is made simple.
How do prepaid cards work?
Prepaid cards work much like a top up cell phone in that you can only access money you have loaded onto the card. Prepaid cards do not provide credit and it is here where prepaid cards differ from credit cards and overdraft debit cards. The money you spend is your own therefore your spending limit is determined by how much cash you have loaded onto the card. More....
How do I load money onto my prepaid card?
You can easily top up your prepaid card, or your child’s prepaid card online, at a bank or by telephone. Money can be transferred from your checking account, credit card or deposited by cash in specified banks. Your prepaid card provider will provide you with all the details you need.
Finding the best prepaid card
Like any other financial product you should shop around for the most competitive prepaid card. Unlike credit cards or debit cards, you will not be subject to any penalty fees for late payments or for over spending because you are using your own money. Nor will will you be comparing prepaid cards based on interest rates – prepaid cards are not a line of credit, therefore you are not borrowing money.
Still, there are some key aspects to bear in mind when making a prepaid card comparison.
a) Opening an account – many prepaid card companies will impose a one off charge for opening an account, ie $10.
b) Using an ATM – Whenever you withdraw money from your prepaid card at an ATM your card provider may impose a charge.
c) Making a transaction – Transaction fees can vary depending on the prepaid card provider but not all companies will charge for transactions, so it’s worth doing some homework.
d) Depositing money – When you top up or load your prepaid card with money your card provider may impose a charge. Since this may be something you will be doing regularly be sure to find out what charge, if any, you will be asked to pay.
e) Ordering a replacement card – We never plan to lose or have our cards stolen but in the event it does happen you should be aware of how much a replacement card will cost.
f) Delivery charge – Ask your provider if you will be charged for the delivery of your prepaid card. If so, consider asking for a reduced charge or threaten to go with another provider.
Make yourself at home in our Forum and find out what everyone else in America thinks about prepaid cards. There is also our up-to-date News section for all the latest on personal finance. If you need help finding a provider or would like to review a company, please don’t go without checking out our A-Z directory.
