Prepaid Cards - Plastic Cash May 19, 2009
Prepaid Cards - Plastic Cash
Prepaid Cards get a lot of people scratching their heads - what are they exactly and what are they for? More importantly, who are they for? Do I need one?
A Prepaid Card looks and feels like a regular credit or debit card. It is the same size and shape, it has a magnetic strip, Chip and PIN and your name on the front. It even has a long card number. But that is where the similarity ends - for the prepaid card is simply a card onto which you can load funds.
Use the card to pay for goods on the internet, in shops and restaurants, and once the funds have run out, you need to top up the card again. You are not able to borrow funds or access a line of credit.
So what is the Point?
Ok, so now we know what the Prepaid Card is, but what’s it all for? Well, if you’re anything like the regular UK consumer, you may find it hard to keep on top of your borrowing habits or credit card use. Many people find it hard, and get themselves into quite a bit of stress by being stuck in overdrafts or unpaid credit card bills. A prepaid card means you will not have this problem. What you load on to the card is what you spend - nothing more, nothing less. So then you may ask, well why not just use cash? Cash cannot be used to pay for items on the internet or via catalogues, for example. A prepaid card means you are able to do this. Also, most prepaid cards are offered in conjunction with a second card. That card can be given to family or friends, who will then also be able to access the money - a really easy and quick way to share money, even if you are in different countries.
What’s the Hitch?
As with any financial product, there is a slight drawback. Prepaid cards are really useful, but most issuers will add small fees on to the card - so for example, there may be the Monthly Management Fee, which will be deducted from your funds. All cards will have transaction fees, which you will be subject to on regular credit cards too. Prepaid card users need to make sure there are enough funds on the card to cover these added fees. Compare issuers to see who has the best deals and least fees as these vary.