This might not be common knowledge but the best prepaid cards function like a combination of a checking account and a credit card. In most cases, they are provided by bank holding companies. In addition, they are branded by established financial institutions.
Before using your best prepaid cards, you have to load money onto the card first. Just like a credit card, you can use your prepaid cards for online and merchant transactions and ATM withdrawals. Also, just like most credit cards, the best prepaid cards are accepted and honored where most credit cards are accepted.
While prepaid cards have a few common features that are similar to credit cards especially when it comes to functionality, its financial features are more identical to that of a checking account. What this means is any amount that is deducted or withdrawn is deducted directly from the balance that is available on your prepaid card.
Fast Facts About Prepaid Cards
Are you considering getting a prepaid card? Below are some fast facts about prepaid cards you need to know:
- Many consider prepaid cards as awesome alternatives they can use for common transactions that will require the use of credit cards. That said, prepaid cards can be very valuable for people who don’t have access to banks as well as those who have little to no knowledge in terms of how they can be used and how they work.
- Prepaid cards are also considered the ideal alternatives for those who have no access to banking services. They are also great financial tools for those who have been locked out of the banking system because of their poor credit scores.
- Those who like to give out gift cards as tokens would be glad to know that prepaid cards would be much better alternatives thanks to their awesome features. For instance, some prepaid cards offer benefits that are offered by most credit cards like protection in the event of theft or loss.
- Oftentimes, you cannot use cash to pay for online products and services. The good thing is prepaid cards can be used to pay for most transactions you will do online. Unlike gift cards, you can use your prepaid cards to withdraw money from the ATM.
- Thanks to the peerless benefits they offer, prepaid cards have become one of the fastest growing niches in the financial space. Many experts predict that the number of prepaid cards sold will reach as much as 22 percent yearly from 2015 to 2020. It has also been predicted that the total amount that will be loaded to prepaid cards will amount to as much as $116 billion by 2020.
- To pick the best prepaid card that will suit your needs, it is recommended that you analyse your spending habits thoroughly. From there, you can easily choose a card that will charge less in areas/transactions where you are likely to be charged often. For example, if you use your card often for various transactions, it would be smart to opt for a prepaid card that will waive fees as soon as you exceed the number of transactions allowed.
- Another important tip you should remember is this: when looking for a prepaid card, find one with a structure you can easily understand. You have to keep in mind that some providers of prepaid cards use a flat-free model while others will charge users for most card transactions. Meticulously analyse your monthly transactions using your prepaid card so you can assess if a flat-free model would suit you best.