Users of prepaid cards are now increasing and might even surpass the number of credit and debit card users. Prepaid cards are better in some ways while bad in the other. You can certainly try out a prepaid card if you wish to. But prior to that, it is important that you are aware of some basic things regarding prepaid cards. We have provided a list of some of the general points about prepaid cards. However, for more information, you can check onevanilla balance .
Prepaid cards are more like debt than credit
You could spend like credit cards using a prepaid card but the difference is that there is no credit. They are more of debit cards as you need to have some amount in your wallet before you spend them. In short, you first load your card and then you spend it.
But prepaid cards aren’t exactly like the traditional debit cards as you do not need a bank account in order to use prepaid cards. You need to load money on your cards and then use them to make purchases. When your balance is over, you need to reload it with money. Most of the prepaid cards are also associated with some major card companies like the Visa, MasterCard and American Express. Thus, they are accepted in most places whichaccept debit and credit cards.
Prepaid cards are an alternative to banks
Since prepaid cards serve the purpose of more like a debit card, they can be considered an alternative to banks. If you have a prepaid card, you can make car based purchases without actually involving the banks. You directly load the balance on your card,unlike debit cards where you load your bank account. In the U.S., there are more people using prepaid cards rather than debit or credit cards.
No credit is required
Prepaid Cards were designed with the purpose of serving poor people or those who do not have a credit history. But now, it is also useful for those who have had credit issues in the past. With prepaid cards, there is no way in which you can spend more than your means. When the balance in your prepaid card expires, you got to refill it before you make any transactions. It is useful for teenagers and those who are recovering from debt. They will have a limit t their spendings and wouldn’toverspend. This does not require a credit check nor will this help you in building credit.
Possessing a prepaid card does not require you to pay interest which you need to in case of credit cards. But most of the times, the fees are hidden. There is no compulsion for the prepaid company to disclose all itsstorms and conditions. So, it is highly likely that you might need to pay the fees later on. Prepaid cards charges for almost everything from the setup to the reloading. The silver lining is that you can compare them by shopping. You can limit the fees if you keep a certain minimum balance or sign up for direct deposit.
Prepaid cards are certainly a good option if you are looking to use it.