What Are the Advantages of Prepaid Cards?
Prepaid cards vs. cash
A prepaid card is a money tool that combines the freedom of cash fees with the versatility of plastic. In fact, having a prepaid card is like having a debit card that you can load with funds as needed. However, that’s just the tip of the iceberg when it comes to prepaid cards.
Essentially, a prepaid card looks the same as any other card; it has a magnetic strip, chip, long number on the front and a familiar logo such as Visa or MasterCard.
There are many advantages of using a prepaid card in the place of cash. Today, we will share with you some of them and help you better understand how you can benefit from using plastic as opposed to cash. Free yourself for a few minutes to sit back and enjoy the ride.
Benefits of prepaid cards:
In addition to the fact that you can use prepaid cards anywhere credit and debit cards are accepted, here are some more benefits to using these cards:
They help you stick to your budget
Having a prepaid card allows you to be in complete control of how much you spend. You are the one who will set the limit for your card and you can top up your card as you see fit. This helps you plan your monthly expenses and stick to your budget.
They are a great way to get rid of debt
If you are the kind of person who could easily spend more money than you have, prepaid cards are the perfect solution for you. Since they don’t provide credit, you will always be debt free if you only use your prepaid card for purchases and expenses.
They are an effective tool for controlling kids’ spending
Are you worried about your kids breaking the bank while in high school or when they go off to college? Instead of handing them the key to your bankruptcy with credit or debit cards, give them a prepaid card and control their expenses. Moreover, if they end up losing the card, you are exposed to less risk than with other cards.
They are a safe option for travel expenses
Your prepaid card is very similar to a credit or debit card, which is why you can also use it abroad. However, prepaid cards are safer for use while traveling since they are not connected to your bank account so the risk is lower in case they are lost or stolen.
They help you avoid banking & ATM fees
Many prepaid cards allow you to access thousands of fee free ATMs. They also give you the option to monitor your transactions and pay bills online or via a mobile app.
They are better alternatives to closed loop gift cards
If you are looking to get the perfect gift for a friend or a loved one, a prepaid card is exactly what you need. Instead of buying a gift card that will limit the recipients’ purchases to certain stores, get them a prepaid card that they can use anywhere they choose.
They are similar to having a basic bank account
Your prepaid card is a good alternative to opening a traditional bank account. It is also a very good option for managing your money and expenses.
Cautions and caveats:
Although prepaid cards seem to be the perfect solution, they come with drawbacks too.
- Firstly, unlike credit cards, your prepaid card will not earn you interest on the money you keep on it.
- Secondly, car rental companies do not accept prepaid cards for security deposits.
- Thirdly, certain hotels and other merchants might put a hefty hold on your card for several days when you use it.
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