The Ultimate Guide to Prepaid Cards

Most of us stopped using paper money at least a few years ago. They were replaced with bank cards and digital wallets, especially when the number of online stores achieved millions. Nowadays, we fill our carts on the Internet and make seamless transactions within seconds. On one hand, it is extremely convenient. On another, you should take security issues and overspending into account. But there is a straightforward way to reduce the risks and still enjoy online payments. We are talking about prepaid cards and below will tell you everything about them.

What is a prepaid card?

A prepaid card is an excellent alternative to physical money and is very similar to a credit or debit card but it doesn’t require connecting to a bank account. A prepaid voucher is also topped with money and can be used online or offline whenever you need it. But unlike a regular card, it has a maximum limit that you can’t exceed. This means that you avoid the risks of overspending and going into debt.

As a rule, prepaid cards come in particular denominations: $10, $20, $50, and so on. The voucher doesn’t contain your personal information, so you don’t have to worry about losing sensitive data. The risks of becoming a fraud victim are much lower because the stolen amount is limited by the size of the card – a theft won’t be able to use credit money as it would happen with a credit card. Many people purchase prepaid gift cards as a present for birthdays, weddings, and other occasions. Thus, there is no need to rack your brains over a perfect gift. 

Types of prepaid cards

There is a big number of prepaid cards, each of which can serve a particular goal. The most common ones are:

• Reloadable cards that can be replenished.
• Payroll cards. They are used by employers to transfer salaries.
• Gift cards issued by retailers or banks to use in particular stores.
• College ID cards are used by students on campuses.
• Opened-loop cards with network logos on them. For example, Visa, Mastercard, or Discover. 

How do they work?

Prepaid vouchers are very easy to use even if you haven’t done it before. As Grace Tennet, a content manager of NZ CasinoHEX mentioned in her latest article, prepaid cards are probably the simplest and the most convenient payment method you will ever find. First of all, you need to go to a local point of sale nearby or an official website on the Internet. Some post offices and PayPoint stores also offer prepaid cards. 

Then, you should decide how much money you want to load on the card. If this option is absent, just choose from a list of available denominations. Some vouchers allow setting up monthly transfers from a bank account to the chosen voucher if it is not disposable. The last are one-time vouchers which can be used only once – you scratch the back of the card to get a unique PIN code or copy it online, make a transaction, and throw the card away.

When the funds are loaded onto the card, they can be used as a regular credit or debit card. Some of them have Visa/Mastercard logos, so they are accepted in millions of stores that support these bank issuers. If you have a physical prepaid card, you will need to insert a PIN code during each payment or when withdrawing the funds at ATMs. There is also an opportunity to conduct contactless transactions but they usually have rather strict limits.

Where you can use them?

There are tens of thousands of online and offline points of sale where you can buy prepaid vouchers. This makes the payment method extremely widespread and acceptable at numerous venues across the world. You can use prepaid cards at online stores like Amazon, booking websites like Airbnb, at the best Neosurf casinos, and even at airlines to book the trip of your dreams. There are even online food deliveries and grocery stores which accept prepaid vouchers!

Prepaid cards: pros and cons

Before choosing any payment method, you should weigh the pros and cons to make sure that it suits you the best. We have made a list of the most common advantages and disadvantages of prepaid vouchers to simplify the decision.

Pros:

• Budget control. With prepaid cards, users don’t have to worry about overspending. They can also limit their losses which is a great advantage for compulsive buyers.
• No risk of losing personal data. When buying a prepaid card, there is no need to share full name, address, bank card details, or other sensitive information. If the voucher is stolen, you risk losing only the money on it.
• Convenient for travelling abroad. Paying with vouchers eliminates the need to calculate foreign currency fees or exchange rates at local banks.
• Teaching kids to use money. With prepaid cards, you can explain them how to manoeuvre in a fast-growing market economy and use the money wisely.
• Overcoming bad banking history. If you have unpaid bank cards, the institution might prevent you from opening a new account. But not in the case of purchasing a prepaid voucher.

Cons:

• You won’t be able to build a credit history. Prepaid cards don’t report transaction details to credit bureaus, so can’t be used for improving your credit score.
• Many charges. Depending on the chosen voucher, you might need to pay activation fees, as well as reloading and transaction fees. There are even inactivity charges if you don’t use a card during a certain period of time.

Prepaid cards – a great alternative to traditional options

Prepaid cards are steadily taking over cash, direct transfers, and other payment methods. In 2019, the global market of prepaid cards was valued at $1.73 billion and is expected to reach $6.87 trillion in 2030. It indicates that customers are interested in alternative banking options with better security and fewer limits. And after reading our article, you know everything about prepaid vouchers and how to use them. Good luck!