If you are like most people, it is highly likely that you are in the lookout for ways and means to curb overspending and manage your money accordingly. The good news is there is an innovative solution that can help you achieve said objectives. All you need to do is get access to the best prepaid cards available.
Nowadays, more and more people have come to appreciate what the best prepaid cards can offer. In fact, many have used it to replace or supplement conventional banking services.
In essence, prepaid cards work similar to credit cards when used for purchase transactions. There is however one huge difference—rather than borrowing money from the bank which is what happens when a credit card is used, you will be spending your own money.
Also known as pay-as-you-go card, prepaid cards can’t be used unless loaded with funds. If no money has been loaded on the card, cardholders won’t be able to use it.
If you are thinking of getting a prepaid card but you’re not sure if it’s the best thing to do, then read on!
How Prepaid Cards Work
Prepaid cards look and feel like the typical credit and debit cards. The innovative plastic card also comes with a magnetic stripe just like debit and credit cards. In addition, others also have a smart chip for added security.
When used for purchase transactions, prepaid cards are used just like debit or credit cards—the number is typed in when used for purchases online and swiped when used at a retailer.
So where will the money for the transactions come from? When spending money using a prepaid card, money must be loaded on the card first. Depending on the prepaid card you have, there are several options available for those who want to load money on the card.
Some of the most common options of loading money on the card include:
- Direct deposit to the card
- Loading cards at shopping outlets / retail stores
- Transferring money from the bank account
- Loading money via a secure login portal
Once the fund is already available on the card, you can already use the card for ATM withdrawals and purchases. When using prepaid cards, you have to keep in mind that while they share a lot of surface similarities, they actually work differently.
Also, with a prepaid card, you won’t be able to spend money that’s not on the card. In other words, if you were not able to load any money on the card, you won’t be able to purchase any transactions, regardless if it’s withdrawals or purchases.
Pay-as-you-go cards or prepaid cards will require users to deposit money upfront so the card is pre-funded. What differentiates them from bank debit cards is users are not required to have a regular bank account to be able to use the card.
Credit cards on the other hand allows users to borrow funds from the issuing bank which they can pay at a later date (along with possible transaction fees and interests).