Prepaid cards are one of the most interesting and new financial products on the market, and everyone should know about them. But a lot of people don't understand what prepaid cards are or how they can help you. If you want to learn more about prepaid cards, here are some pros and cons to think about.
What does it mean to be prepaid?
Prepaid phone cards and SIM cards are pretty common, but prepaid debit cards are a newer idea. But the idea is the same as with other prepaid methods, where you put money on a card and can then spend it at stores or take it out of an ATM. You can put money on the card with cash, a wire transfer from your bank, or another card.
What kind of cards are they?
Prepaid cards are not credit cards or debit cards, but they have some of the same features as both. Most of the time, these are VISA or MasterCard cards, which means they can be used anywhere and have the same security features as a credit card. But you are not borrowing money; you are just putting your own money on a card so you can use it. They are a type of financial product between debit cards and credit cards.
What's good about it?
The best thing about a prepaid card is that it's easy to keep track of how much you spend and set a limit for how much you can spend each month. You don't have to pay interest or go through a credit check to get one, either. You decide how much money you want to put on the card, and that's how much money is on it. This means there is no chance of taking out too much debt by borrowing too much.
Who needs a prepaid card?
Prepaid cards are good for people who want to keep track of how much they spend but still want the security and convenience of a credit card. Also, prepaid cards can be very helpful for teens or kids who need a card but don't have one yet. As a parent, you can control how much they spend by only giving them a certain amount of money to spend each week or month. This gives them the freedom and security of being able to buy things with plastic.
How much a pre-paid card costs
Prepaid cards have a lot of benefits, but they can also cost you money through fees and charges. Many prepaid cards have both an application fee and a fee for each month of use. If you pay a monthly service fee, you should make sure that you get other services, like helplines or more security, for your money. Before you get a prepaid card, you should compare prices to find one with the lowest fees. Even though you don't pay interest, these fees can add up and, if you don't use the card much, could end up costing you more than you spend. But if you look around, you can find some good deals. If you want to keep track of how much you or your child spends, a prepaid card might be the way to go.
