Prepaid debit cards are so popular that Americans have almost five billion of them. These handy cards give users an extra layer of financial security, easy access to their money, and a smart alternative to credit or traditional debit cards.
Curious how prepaid card services work? This guide will explain everything you need to know about your options, obtaining your own prepaid debit card, and using your card to make purchases.
What Is a Prepaid Debit Card?
These are cards that look like a debit or credit card but function more like a pay-as-you-go card. Unlike a credit card, you need to load money onto the card before making purchases with it. However, it’s different from a traditional debit card because you don’t need a bank checking account to accompany your card.
How Do I Get a Prepaid Card?
How you go about getting your stored-value card will depend on what your intended purpose is. If you have a low credit score or poor credit history, a prepaid card can help you boost your credit score. You can obtain these cards from credit card companies or banking institutions.
Other prepaid cards work as a form of payment. These cards will come preloaded for you from the company paying you. You may get these cards from a retail company or other financial entity, such as Rightway Funding.
How Prepaid Cards Work
There are two main types of prepaid cards. The first is a single-use card that you load once, and then the card is done when you spend that amount. The other type is a reloadable card.
To use this card, you’ll load a certain amount of money onto the card. You can then add more money to the card as you make purchases. Some of these cards limit how much you can load onto the card, withdraw, or spend during a time period.
Some prepaid cards give you ATM access. These are typically reloadable cards that are issued by banks.
Adding Money to Your Card
Adding money to your card is easy by direct deposit, check deposit at an ATM, or cash loading at specific retailers. Some cards even allow money transfers through the use of an app on your smartphone.
What Are the Fees?
The fees can vary from none to many with prepaid cards. Some have an activation fee that will get deducted from your initial deposit. There can also be out of network fees for depositing money or using the card outside of a chosen territory.
More expensive cards charge a monthly fee for service. Sometimes, these fees get waived if you meet certain usage criteria.
Consider Prepaid Card Services
If you’re looking for a financial tool that doesn’t require you to open a bank account and doesn’t have a credit card’s high-interest rates, then prepaid card services may be a smart choice. These cards can help you develop financial responsibility by placing limits on your spending ability.
Check out our other financial articles for more tips and advice on managing your money.