By now most of us know that prepaid credit cards function differently than credit cards. Prepaid cards are becoming more and more popular and some are even starting to offer rewards. With their popularity on the rise, prepaid cards are readily available to just about anyone. Whether you are in the market for a prepaid card or you just like to be in the know, this article highlights some key points about prepaid cards that are different from credit cards.
- An Alternative to Bank Accounts
Those of us who have a bank account and use it on a regular basis would probably find it very difficult to live without one. We have become accustom to the benefits and convenience having a bank account offers. Believe it or not there are about 80 million people in the United States that do not have a bank account. A great alternative for these people is a prepaid card. The reason it because prepaid cards offer some of the same benefits bank accounts offer, but without the risk. With a prepaid account you can’t overdraft the account and you don’t get charged interest. This offers a sense of security, especially for people who might have had banking problems in the past. - Credit Doesn’t Matter
When it comes to prepaid credit cards your credit history is not a factor. Whether you have excellent credit or bad credit you are still eligible for an account. The reason is because a prepaid card is not a line of credit and you can’t overdraft the account. As a result, your past credit successes or problems don’t factor in. This is one reason why prepaid cards market their products towards those with bad credit. It is a way for people with bad credit to still have some banking benefits. With that being said, prepaid cards offer a variety of benefits that can apply to those with good credit as well. - Not All Card Function The Same
Prepaid cards do not all work the same. Each card has features and fees specific to the card. This is important to keep in mind if your shopping around for one. Knowing the features will help you choose the card that fits your needs. For example, some cards offer online bill pay, but some don’t. If your reason for getting a prepaid card is to take advantage of the online bill pay service make sure you pick a card that offers that feature. Also, be sure to check out the fees that are associated with the card because the fees can vary greatly. - Reloading The Card Is Easy
Prepaid cards work by adding funds to the card. Your balance is based on the amount you add. Once you spend all the money on your card you have to reload the card to continue using it. There are a variety of ways to add money to the card, each card works differently. Most cards allow you to sign up for direct deposit and have your paycheck electronically deposited into the account. Another options is to go to a store location like Western Union and add cash to the card. Some cards even allow for bank transfers to take place. - Fees Can Vary
All prepaid cards have fees, but they are not all the same. There are essentially three types of fees: monthly fees, one time fees and fees that are charged when you use a service. A monthly fee would include the fee you are charged once a month for the account maintenance. An activation fee is a one time fee that is charged to you when you open the account. Finally, some features prepaid cards offer also charge a fee, like for an ATM withdraw. Again, not all cards charge the same fees they vary from card to card. Some cards have high fees and others have low fees.
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