Meta-description: Prepaid Cards have become a necessity as one can simply not live without them. Here’s everything that you need to know if you are applying for one.
There is an increasing number of people using prepaid cards, and they have grown in popularity over the past several years. Their rise in popularity is due to their convenience, security, and versatility. A prepaid card is similar to a credit card, but there is a major difference, a prepaid card limits the spending and it has an expiration date. Prepaid Cards are potentially a good choice for you if you have bad or no credit, you want to limit your spending if you want to gift money, help your child learn to manage money, or if you’re planning to save money. So, if you are planning to apply for a prepaid card, here are some things that you should know.
How Does It Work?
With a prepaid credit card, you can make purchases without having to deal with the bank. And if you have a credit card, you can determine the amount of money you can put in it and use it for daily expenses or whenever needed. to put the money on the card, you can transfer the money from your bank account, direct money, or take the money to the retail location from where you got the card. You can pay for your expenses from the card as they can be used anywhere, or withdraw the money from an ATM.
You Do Not Have To Deposit A Security: One of the best things about prepaid cards is that you do not have to make a deposit to the bank. We usually have to deposit an amount for a secured credit card; however, that is not the case with prepaid cards. This makes prepaid cards convenient and a popular choice for most people.
You Do Not Have To Pay An Interest- Since a prepaid card is different from a credit card, you do not have to pay interest. And unlike credit cards, you cannot overspend past the amount that you have. Once you have reached the limit of your fund, you cannot make any purchases, and if you do try, it will be rejected, unless you are using one that allows overdrafts.
No Credit Check- And you do not have to worry about your credit score as there is no credit check for the prepaid card since it is your money and not a loan. If you know how to manage, it can help you avoid debts and other financial charges. Your credit does not matter no matter how bad it is, you can still get a prepaid card and use it instead of a credit card.
If You Lose The Card, You May End Up Losing The Money- The negative thing about prepaid cards is that, if you happen to lose the card you might end up losing your money as well. So in case you lose it or someone steals it, you can check the terms and conditions of the card and keep all your account information handy in case of any accidents.
There Will Be No Credit Effect- Using a prepaid card will not affect your credit score, which means that you cannot use it to build your credit, and you will not have to worry about getting bad credit as well. Prepaid cards are great if you want to limit the amount of money being used, or you do not want to carry cash without affecting your credit score. And they are great to help you keep on track.
Another con of a prepaid card is that there is limited to no protection if you lose your card or it was stolen. It has fewer protections as compared to a credit card. These are some of the things that you should know about prepaid cards if you are planning to get one.