A prepaid debit card is much like a gift card in that you are accessing stored value on a card. It is pre-loaded with a certain amount of cash, which can be used the same way that a credit card is used.They are practically debit cards– when you use them, you’re spending your personal money, not the bank’s.
As against traditional debit cards, however, you don’t need a bank account to use a prepaid card. The payment is immediately deducted from the balance. Once the balance is used up, the card can be reloaded with cash online or through certain convenience stores or other participating physical location depending on the card.
This type of card is issued by banks and branded by the major credit card companies, including Visa, MasterCard, Discover, and American Express. No credit check is done before issuing a prepaid debit card. For the fact that prepaid cards are associated with major card networks – Visa, MasterCard, American Express and Discover – they can be used anywhere debit cards can: to purchase food, refuel your car, even pay bills online. And because the fees merchants pay to accept debit cards; prepaid debit cards inclusive are lower than those for credit cards, there may be places that will accept your prepaid card, but not credit cards.
Types of Prepaid Gift Cards
American Express Card
American Express Gift Cards (AMEX) are prepaid cards that can be used for in-store and online shopping almost immediately after their purchase. An Amex Gift Card is a prepaid payment card with a value in dollars, that can be used until its balance is reduced to zero. By not being a debit, charge, or credit card it doesn’t come with any fees. While it is often used as an incentive to reward employees or survey participants, it is also a much appreciated gift people who enjoy online shopping.
PayPal Prepaid Card
PayPal Prepaid gift cards can be used to make payments for any product or service except for recurring payments or reference transactions.
This is because due to the nature of prepaid gift cards, they can become low in balance over time to cover the recurring amount. Prepaid cards are a great option for those who can’t (or don’t want to) get a checking account or credit card.
Visa Prepaid Card
Visa Prepaid Gift Card is a “non-reloadable prepaid” card. Like a credit card, when you are ready to pay, use the Visa gift card like you would use any credit or debit card. Every time you make a purchase, that amount is automatically deducted from the card balance. The Visa Gift card is a “non-reloadable prepaid” card. This means the initial value is set by the person who purchased the card. Additional funds cannot be added later. The Visa Gift card carries the Visa logo like any other Visa card, so it can be used at the millions of places that accept Visa cards, including online.
Walmart Prepaid Card
Walmart Prepaid gift cards can be used to make purchases. It can serve as a gift item, recipient’s cash to purchase whatever they like. Walmart gift card can be reloaded and used for as long as possible.
Vanilla Visa Card
The Vanilla Visa gift card is a generic, open loop prepaid Visa card which serves a similar purpose as cash, only that it is limited by the card dollar amount denomination.
All You Need To Know About Prepaid Debit Cards – Disadvantages of Prepaid Cards
There are several charges associated with prepaid cards. Prepaid credit cards come with a variety of fees that can eat into your cash balance. There are usually charges of: application fees, monthly fees, top-up fees, transaction fees, ATM withdrawal fees.
Some prepaid cards even charge inactivity fees, if a user doesn’t use the card for over a year.
All You Need To Know About Prepaid Debit Cards – Advantages of Prepaid Cards
If your card is stolen your loss is limited to the amount on the card.It is a safe way to carry money around. Prepaid cards have theft protection, as do credit cards.
Your information cannot be stolen. Personal and financial information are not on this card so your identity and data are safe.
It can be used for online purchases and routine payments as easily as in a store.
It can be gifted as an alternative to cash.
Anyone who wants to stick to a strict budget could consider using a prepaid debit card.
With prepaid cards, some fees or charges are a distant echo. There are no interest charges or bills whatsoever.
If you are prone to overspending you can’t spend more than the amount loaded onto the card. Users with a bad credit rating or a young person with no credit history can use a prepaid debit card to build responsible spending habits over time.
If you report the loss or theft of a registered card to the issuer, most will restore your original balance and issue a new card. In other words, a prepaid card works like a debit card. Minus many of the risks and, of course, the bank account.
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