A prepaid card, sometimes referred to as a stored-value card, is a debit card that you can purchase and load a certain amount of money onto for spending.
What Are Prepaid Cards?
A prepaid card can be thought of as a safer and more secure way to use a debit card. Instead of risking overdraft fees, or spending more than your budget allows, a prepaid card can only be used for the amount loaded onto it.
The prepaid card is like a prepaid phone card, but instead of paying to load your card with internet data or minutes, you load your card with money. Then you can use the prepaid card to pay instead of cash. You can use this card to accept your direct deposit, withdraw money from ATMs or for other transactions some people even use prepaid debit cards to repay payday loans.
The key difference between a prepaid and Debit card is that you don’t need a bank account to have a prepaid card. This is a good option for those who do not have access to banks — people who, for whatever reason, do not use banks or credit unions for their financial transactions. These cards are sometimes referred to as reloadable debit cards, but are not true debit cards like the types offered by FDIC insured banks.
The main advantage of a prepaid card is that you don’t need a bank account. This means that almost anyone over 18 years of age can be approved for a prepaid card, regardless of their credit score and financial situation. Prepaid cards allow you to have some of the benefits of credit cards, like the ability to pay online, avoiding cash, and accepting payments from your employer or customer, without being forced to have a bank account. This makes prepaid cards especially appealing to young people.
If you are struggling to pick the right card for your needs, consider these four questions:
- Do you consider yourself to be financially responsible?
- How well do you manage your money?
- What are your financial needs?
- How do you plan on spending your money?
Think of accurate answers to get to the perfect choice. Depending on your answers, a prepaid card may be the optimal solution for you. Thanks to its simplicity you won’t be tied to a bank account. Being limited by a credit limit or repayment obligations will never burden you!
