Over the years, the best prepaid cards have continued to grow in popularity and have not shown any signs of slowing down. In fact, a staggering 23 million adults use them frequently at the grocery checkout, gas pump, or the ATMs. The best prepaid cards are used like debit cards, making them one of the best financial tools available.
Prepaid Cards 101
Since prepaid cards are very easy to obtain, they are considered the best alternative to credit cards, checks, and cash. Also known as general-purpose reloadable, prepaid credit cards, or prepaid debit cards, they can only be used once money has been loaded successfully onto the card.
Those who don’t have access to savings or checking accounts used to be the primary users of prepaid cards. However, thanks to exciting and peerless benefits they offer, prepaid cards have become massively popular, growing an impressive 50 percent between 2012 and 2014.
Different Types of Prepaid Cards
Just as the name indicates, rather than receiving the usual pay checks, many employees nowadays prefer to have their salaries, bonuses, and other incentives loaded directly to their prepaid cards. Once the money has been loaded, they can use their cards to pay the bills, purchase goods, and withdraw from ATMs.
Gift cards come in monetary denominations that are specific. Gift cards are designed to be used for purchases at specific stores. Often, they are not reloadable but they are considered ideal for gifting.
General Purpose Reloadable (GPR) Cards
With a general purpose reloadable card, you need to load money onto the card first and use it like you would a debit card. GPRs work similar to most credit and debit cards and are often honored and accepted at merchants and online stores.
The Benefits of Getting a Prepaid Card
- They are easy to get. Prepaid cards are very easy to obtain.
- They are easy to use. As mentioned earlier, prepaid cards are honored and accepted almost anywhere where major credit and debit cards are accepted.
- They are considered safe. While you can also lose cash when using your prepaid card, it is often very minimal. If you lose your credit card on the other hand, there is a possibility that you can rack up substantial charges. This is especially true if you have a very high credit limit. Also, if you lose your prepaid card, the loss is often limited to the balance available on the card. Thankfully, some prepaid cards also provide protection against theft or loss.
- They won’t require credit checks. This is considered a massive advantage by those who are unbanked and those who have less than stellar credit histories.
- They are great budgeting tools. You can load money onto your prepaid card that’s intended for groceries and other things. So if you have depleted all the balance intended for the groceries, you would have to live off with what’s remaining in your pantry until the end of the month.
- There are no monthly bills to take care of. If you hate the inconvenience of sifting through electronic statements and paperwork, you would surely love prepaid cards. With prepaid cards, there’s no need to sift through electronic statements or paperwork monthly.
- You won’t incur any debts. When using a prepaid card, your transactions will be limited by the balance that’s available on the card. As soon as the balance has been depleted, your spending will also stop automatically. Unlike credit cards, you won’t incur mounting debts when you use a prepaid card.
- You will have overdraft protection. As mentioned earlier, you won’t be able to use your prepaid cards for the time being as soon as all the balance has been depleted. Fortunately, you can use your prepaid card right away once money has been successfully loaded onto the card.