Prepaid cards are a type debit cards that draws down a balance that is already loaded or deposited on the card. Prepaid cards are commonly called prepaid credit cards. There are different types of Prepaid cards based on the function they serve including gift cards, travel cards, payroll cards, and general purpose prepaid cards. Unlike debit cards, Prepaid cards typically do not require opening of checking account at a bank. The companies that issued the card and allow customer to access their funds by using it to purchase goods and services wherever a visa or MasterCard debit is accepted maintains the card balances. Cardholders can also use the Prepaid Card like a check card by withdrawing cash from their balance at ATM locations worldwide. These cards are designed for long term use and generally FDIC (Federal Deposit Insurance Corporation) insured, which means that if the issue of the card has financial troubles you can get your money back.
? These Signatures based prepaid cards will allow reloading to the card. Like the other prepaid cards, it can be connected to a bank account, and in some cases may allow you to have your payroll check directly deposited into the account.
There are three ways to use a Prepaid Card
?Use it with Signature Purchase: - A prepaid card can be used anywhere Visa or MasterCard is accepted. (E.g. restaurants, movie theaters, clothing stores, drugstores, supermarkets, etc). Like a regular credit card, cardholders simply sign the receipt after swiping the card
There are numerous benefits from Prepaid cards. These include:
? Accessibility - There are no credit checks and no Check System checks to get a Prepaid Card. and can get transaction history. Anyone can get a Prepaid card. Certain state and federal laws does require government issued ID to get a Prepaid Card.
?Easy Reloading. It's easy to add more money to the card so the card can be used over and over again. Prepaid cards allow direct deposit of Payroll Checks, Commission Checks, Expense Reimbursement, Government Checks (Social Security, IRS, Medicare, Unemployment, Disability, Welfare, Military, etc.). Save on check cashing fee. Save a trip to cash to the check. And get paycheck even if not in the office. Certain Prepaid Cards allow you to add more money at drug stores and grocery stores so you can have 24/7 accesses to your money.
?Safety - If you are buying online or on the phone and your card is used fraudulently you can get your money back. If you lost your card, Visa and MasterCard has lost/stolen protection.
?Control - Prepaid cards are an ideal way to control the spending of children and employees as it gives transaction history and don't let people spend more than what they have on the card.
?No debt risk: - With a prepaid card there is no chance of spending too much as it is limited to the amount put on the card. There is usually no way to overdraft a prepaid card like a bank account thus customers can avoid overdraft fees that can go up to $40 per overdraft.
?The card for travel: - As well as being able to top up the card, depending on the specific provider, it can be used in ATMs worldwide. If lost, a new prepaid can be issued from the card provider. Some providers even offer 0% foreign exchange fees.
Prepaid Cards are suitable for those who do not have a bank account and who regularly face inconvenience in cashing their paycheck and making routine payments like for utilities and phone bills. This Card is not a credit card. It is prepaid. Because no credit is granted and no payments are required, this Card does not build credit history.
