Prepaid cards are the cards that give the advantage of making transactions without using cash. They are not similar to traditional cards like usual credit and debit cards. They allow the consumer to spend up to the maximum available limit on the card. But they are advantageous as they save people from going into an unnecessary debt cycle. And it is a great option if you are trying to save money. Maybe you like Online classes.
The benefit of Prepaid Cards
- Prepaid cards aid to help you stick to the spending limit according to the budget.
- The biggest advantage is that it does not ask for employment verification to issue the prepaid card.
- The card grants the facility to produce if you are not seeking any other credit card.
- This protects you to not get into debts unnecessarily because it does not affect your credit score.
- Some banks also allow withdrawing funds utilizing the card.
- It can be utilized to make payments for utility bills and others.
- It is also beneficial while distributing salary to employees.
- It is also utilized as a gift card or travel card.
Types of Prepaid Cards
Open looped cards: These cards are linked to famous networks like American Express, Visa, or MasterCard. They are associated with and also known as open system cards. They are acknowledged at locations and merchant outlets approved banks.
Closed looped cards: Gift cards are usually issued as closed-loop cards. Their acceptance is restricted to associated merchant outlets for purchasing things and other facilities at those channels.
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Semi-open looped cards: These are accepted by various merchant outlets or chains, which are connected with the card. And these are mainly issued by shopping Centres or retail chains.
Reloadable Card: There are the majority of reloadable prepaid cards, and these cards have an option to add funds once the preloaded amount has been utilized.
Non-Reloadable Card: These are the cards where reloading cannot be done, once you spend the available money. Also, you can only make purchasing by utilizing the available balance on the card.
Common Fees for Prepaid Cards:
Here is the description with each Fee type
Insurance Fee: It is the fee that is taken at the time of card issuance.
Annual Fee: It is a fixed fee for every year that has to be paid even if you do not utilize the card.
Loading Fee: Fee that is levied, when you add money to the card.
Transaction Fee: Fee that is charged, each time when the card is utilized to make the transaction.
Card to Card transfer Fee: The charges are deducted when money is transferred between 2 prepaid cards.
Card Replacement Fee: The fee is charged on card replacement if the card has got lost, stolen, or damaged.
Prepaid Cards have a plethora of benefits, though they do not function like credit cards they help consumers to stay within their set budgets and avoid unwanted debt.
Common Questions asked related to Prepaid Cards
Do prepaid cards charge fees?
A prepaid card charges several fees, it involves a fee to buy the card and activate the bank account. Other charges also include, monthly fees, reload fees, ATM withdrawal, fees, and other transactions.
Can you take cash out of a prepaid card?
Some banks give the facility to withdraw funds out of the prepaid card. However, you may be charged a fee for the same.
Does a prepaid credit card build credit?
You are not borrowing funds, so it does not have a credit line associated with them. And they are not reported to the credit agencies, so they do not play any role to enhance the credit score.
Prepaid Cards have a plethora of benefits, though they do not function like credit cards they help consumers to stay within their set budgets and avoid unwanted debt.