Prepaid cards are plastic alternatives to carrying cash around, and they are often called everyday cards. You usually have to load them with money, when you first buy them, and then always keep topping up when they run out just like your mobile phone.
They are not credit cards, and therefore you cannot run debts on them. They are very good with teenagers, or people who spend too much or if you do not have a bank account.
Prepaid cards are also excellent for shopping online because they do not have a credit facility as a rule. If online fraudsters nick the number, the damage you shall have is limited only to the amount you had loaded on the card, before you are able to ask the card company to block the card on your behalf.
Since you cannot use this card to borrow, they are an excellent way of budgeting, and the other good news is that you will not have to undergo a credit check before you qualify for the card. For this reason, you can have many of them in your wallet for everyday use.
How does a prepaid card work?
When you first get the card, you will have to decide precisely how much you want to load it with. They usually have an upper limit, because they are meant for everyday spending. You should also not put too much on the card for security purposes. Think of them as cash in your pocket.
If the card starts running out, you are allowed to top it up in many different ways. You can either go to the shop and top it up in person or do it at a pay point or the post office. You can also do it over the telephone or online, although if you choose to do it online, you must have a bank account where the money shall be taken from.
You can also choose to use an SMS text for payment of the card, in which you may need to have your monthly or weekly wages paid over the card.
For those who have a bank account, the process of reloading becomes straightforward, because you can simply set it up with a standing order or a direct debit to load up the card regularly. Not all of these methods are acceptable; however, so, ensure to check which ones are acceptable by the company you have chosen.
All prepaid cards are linked to either a building society or a bank. They come with a MasterCard Logo, or a Visa logo, which means that you can use them anywhere in the world that accepts these two systems of payment.
You will need to use a PIN in order to make a cash withdrawal or a payment, and some retailers may even ask you to sign after making your payment.
They are much safer to use compared to money, and other than the PIN details, the prepaid card company will have all of your details on record so that they can be able to replace it immediately if it happens to get lost.
Best prepaid debit cards:
Prepaid debit cards will offer the user the convenience of a credit card, without the risk of debts. You can be able to use them to make purchases in any place where credit cards are accepted. You do not have to worry about getting into debt, because the prepaid debit card only uses money that has already been deposited.
They are easy to apply and gets approval very fast compared to credit cards. This makes them a smart option when you need a convenient way of paying for your expenses, but you do not qualify for a credit card yet.
They are also quite popular among people who need to have a secure and more convenient mode of payment, but they do not want to be in debt.
These cards are not all the same, and some offer more benefits with lower fees than others. You will, however, need to carefully read the terms and conditions in order to understand all the benefits that the card offers.
Here's what to look for in a prepaid debit card;
When looking for a prepaid debit card, consider the following points;
- Look for a card with an easy card loading option.
- Look for a card that offers many different ways to spend and pay for your bills.
- Look for a card that has low fees or none at all.
- Look for a card that allows you to deposit for free.
- Look for a card that is widely accepted.
- Look for a card with the ability to send money to family and friends online or through a mobile device.
This is a great card for people who do not want to go through a long application process. It doesn’t have a credit check; neither does it require a minimum balance. All you require is an ID to prove that you are who you say you are.
You will always receive a Realtime alert whenever you use it, so that you can know the account balance or if your funds are running low.
It offers greater peace of mind, thanks to their Visa Zero Liability, which is a policy that protects your funds in the case of fraud or if your card is either stolen or lost.
It has an easy online payment method.
Best Cashback card – American Express Serve Cash Back Card
This prepaid card offers the user many rewards as a result of everyday purchases. This is a rare quality to find in prepaid cards. This is the only card that offers 1% cash back on all purchases you shall make with it.
The card charges very low monthly fees of $5.98 in most states. You can, however, be able to make this up with the cash back, if you ensure to spend more than $598 each month using the card.
Loading the card will cost you at least $3.95, but, if you use your bank to load the card, it will be free. You should, however, check with your bank for any hidden charges such as origination cost, which most people do not know about.
The card does not charge any fee on ATM withdrawals,
If you are planning on spending more than $600 per month with your debit card, then this is the best for you, because you will be earning an unlimited amount on their 1% cash back guarantee.
Best reloadable prepaid card – NetSpend Prepaid
This card allows a very quick and fast deposit and gives you an alert when your money is available. You can also load it using your mobile check deposit from their 130,000 reloadable locations, and can even allow you to receive money from friends and family members who are using the same cards.
You can easily download the NetSpend app for easier management of your account, and you will also be able to earn cash back with every purchase you make using the card. You can also create a temporary card number for your online transactions. In this way, your real card will not be exposed to fraudulent transactions and theft.
The company has three different plans for your card needs which will depend on your deposit habits. Their default plan, however, is the pay-as-you-go. This doesn’t charge any monthly fees but requires a signature verification for each transaction and a $2 fee for each PIN transaction.
Another plan you shall find with this card company is the Premier Free Advantage Plan, which is the best value when making direct deposits of $500 or more. You will be paying a fee of $5 per month inclusive of all transactions.
Best Prepaid card for teens – Akimbo Prepaid Master card
This card allows you to create a different prepaid card for each of your needs and you can easily manage the cards by using the App.
The first card you get from the company is normally free, but every other subsequent card will cost you $4.95. You can be able to schedule weekly autoloads for your recurring expenses. You will also have the freedom to disable and enable the cards as you wish.
As such, this is the perfect card to give your teenagers, as you have the ability to control their activities, and in addition, you will get an alert in case of any expenses, and if they exceed their limits, the control to disable the card is in your hands.
This card doesn’t have a monthly or enrolment fee, and in addition, there are no transaction fees for signature purchases. ATM withdrawals are charged at $1.98 each, and any ATM balance inquiries are charged $0.33. If your card remains dormant for more than 12 months, you shall be required to pay a fee of $5.95 for activation of the card.
Best for Walmart – Walmart Money back Visa Card:
With this card, Walmart shoppers are able to enjoy up to 3% cash back on all their purchases online, and 1% on all purchases from the Walmart stores.
If you use the card to fuel, at Walmart Fuel Stations, or use it at Murphy USA, you shall be entitled to a 2% Cashback.
The card offers free direct deposits with mobile direct deposits as well as online deposit platforms. If you load above $1,000 the $5 fee shall be waived, and all deposit fees are normally up to $4.95 depending on the reload method you shall use.
Best for kids – FarmZoo Prepaid Debit Card:
Teaching kids how to manage money is not easy in this new age of credit and debit cards. FarmZoo makes this process very easy for you, with no fees whatsoever.
The beauty of this card is that it allows you to create both child and parental roles. These roles limit the access and functionality of the card depending on the role. You also have the ability to transfer money between the two cards, and even create an automatic transfer of funds from one card onto the other.
There is also a feature for tying chores to penalties and rewards. As a parent, you can be able to block the card in order to control its use, and also protect it from fraudulent access.
A paid subscription from FarmZoo allows you to use up to 4 FarmZoo cards for as long as it is active. You can be able to order additional cards at a fee of $2 each, and a monthly subscription of $5.99 per family.
The card doesn’t have any reload fees in case of direct deposits, but some providers of the service may charge you a fee. If you are transferring money between cards, this is free.
Best card for Online transactions – Movo Digital Prepaid card;
The biggest benefit of the Movo card is its ability to keep your information secure while transacting online. It also allows you to create a temporary card on your phone which you can use wherever you are to access money and make purchases.
For in-store shopping, you can make use of the digital card, which is acceptable in virtually every store.
It doesn’t have a monthly fee, and you are allowed to add money on the card free of charge using whichever method you prefer. You can make a direct deposit from your bank, and it will also not charge you for cash reloads from the retail locations. Keep in mind, however, that the retailer may charge you for this.
If you need to have cash money, you can withdraw from an ATM machine free of charge, and the company has over 6,000 machines scattered all over the country. If you use any other ATM machine other than the company ones, you may be charged up to $2 per withdrawal, plus some ATM operator fee depending on the company you shall be using.
Another great benefit with the Movo card is that it can act as an intermediary when you want to transfer bitcoin cash or bitcoin from one person to another, although you shall be required to pay a specific fee for that.
Best for savings – Mango Prepaid card:
This card has a saving account that is attached to the card. This offers up to 6% annual yield on balances that exceed $2,500. You will also earn a 0.10% APY yield when you go way beyond that particular threshold.
Keep in mind that when you sign up for this card, you shall only be entitled to the 6% annual yield, when you deposit more than $25 immediately and spend over $1,500 in purchases that require a signature only and not PIN.
This card will also offer you a $10 bonus, for any referrals you make that end up in activations. You should ensure to check the terms and conditions before enrolling so you can be able to understand all of the conditions of becoming a member.
This card is however more costly compared to the other cards we have outlined because it will charge you a monthly fee of $5 and an additional $3 for ATM withdrawals within the US. There will also be an added operator fee depending on the machine you choose to use.
Best for lowest fees: Bluebird Prepaid card by American Express:
This card will charge absolutely no monthly fees, and no cash/debit reload fees if you reload at Walmart. Other locations will attract a fee. The card doesn’t have any ATM fees, but if you use the non-money pass ATM machines, you will pay a fee of $2.50 on your bluebird American express card.
You can be able to load up your card through an online debit, a direct deposit, or a mobile deposit using the Ingo money, which normally has a 10-day waiting period.
The card will allow you to create at least four other family accounts, with an additional SetAside account for your personal savings. Although there are no reward programs, it gives you access to the Amex Offers Program, which offers savings when you shop at specific retailers.
Reasons for choosing a prepaid card:
They do not require any credit checks:
This means that you immediately qualify for the card without having to wait for some time in order for your credit check to go through.
When you apply for a normal credit card, the bank you use will need to check your credit history, and if you happen to have made some mistakes in the past such as bouncing a check or not paying a loan in good time, or even neglecting a bill, you might end up being denied.
They Allows direct deposits:
Traditionally, it may take up to 2-3 days for you to access money, especially if you have made a check deposit. This could be quite tedious if you wanted to use the money immediately.
With a prepaid card, deposits are instantaneous, and you are able to access and use the card immediately for online purchases, or even when you want to make a direct purchase from a store such as Walmart.
Online transactions tend to be feared because of the number of frauds going on in recent years. This will, however, become a thing of the past because a prepaid card allows you to use a pseudo card instead of the real card for online transactions.
In addition, these cards come with a cash limit, which means that in case the card is stolen, you will only lose what you had loaded on the card.
With a normal credit card, you may lose thousands of dollars because this is money you use on credit.
The use of Prepaid cards may not be as popular as normal credit cards, but it is one of the best ways you can use to limit your spending, and ensure that you do not get into too much debt.
It is a well-known fact that one of the reasons why most Americans have a bad credit score is due to their credit card bills. Using a card with money that you don’t necessarily have in the bank is very tempting and, in most cases, it leads to impulse buying, and as a result, you end up with a huge bill that you cannot be able to repay. This is the beginning of your downfall.
In order to ensure that you keep your finances in check and that you are in a position to budget your money, choose to use prepaid cards for your whole family, as this will keep you within your abilities, and ensure that you do not spend money that you do not have.