What is a Prepaid Card?
Like debit and credit cards, prepaid cards allow you to make purchases without cash or checks. Unlike credit cards, you cannot take on debt with a prepaid card, and unlike debit cards, prepaid cards are not linked to a bank account. A prepaid card has a zero balance until you add money to it. How Prepaid Cards Work When you make a purchase with a prepaid card, the amount is subtracted from the balance of the card. Once the balance reaches zero, the card is empty. It can then be discarded, unless it is a reloadable card, in which case you can add funds and continue using it. With Prepaid Cards You Can: • Make purchases in person, online, or by phone • Give gifts to friends and family • Withdraw cash from an ATM or bank • Receive wages or funds by direct deposit to the card • Pay bills Kinds of Prepaid Cards Reloadable cards. A reloadable prepaid card is one that lets you add funds after your initial purchase. Teen cards, Travel cards, and Payroll cards are often reloadable. Gift cards.
Prepaid cards are, in fact, not credit cards. Prepaid cards act like credit cards but, in reality, are more like debit cards. These types of cards have many benefits, including: No finance charges, easy budgeting, avoiding debt, etc. With prepaid cards, the cardholder determines the credit line. Generally speaking, a cardholder’s credit line depends on how much money he/she transfers to the card. Therefore, there is little risk of running up credit card debt, while budgeting is made easier. Although most prepaid cards do not charge finance fees, other fees may apply, including: monthly fees, startup or application fees, overlimit fees, ATM fees and more. Be sure to thoroughly look over the terms and conditions for each specific card before applying.
Prepaid is an innovative way to manage your money. A prepaid card looks, feels and works similar to a debit card, and can be topped up like a mobile. Prepaid cards are NOT debit cards or linked to a bank account. Only the funds that have been loaded by the cardholder can be spent. There are no credit or overdraft facilities, and no fees/penalties from these services. Prepaid cards can be used at ATMs (cash machines), and purchase items wherever the MasterCard Acceptance Mark is shown.
