Prepaid debit cards were introduced to meet the market need for a secure payment method that reduced the risk of over-spending. It lets you load funds directly onto your card from your bank account. It essentially just converts paper currency into electronic currency. The credit limit is set at the amount that has been deposited and is deducted from the same.
How do they work?
Prepaid debit cards, much like any other debit or credit card, come with their specific PIN (Personal Identification Number), but they do not let you spend from your bank account. Neither is there a pre-determined credit facility that you can use to pay for your purchases.
Instead you load an amount onto the card, and once that amount runs out, you can no longer spend anymore. You will have to upload more funds onto the card before you use again.
Advantages
Here is a comprehensive list of the advantages of a prepaid debit card.
1. No Debt
The absence of a credit facility lowers the risk of you incurring debt significantly. Since you would be spending only upto the amount that you have deposited, you could hardly over-spend. Besides inculcating discipline, it helps keep your budget tight.
2. Control
Unlike a credit card, where your card provider is setting your spending limit, you can decide how much money you are comfortable spending. And if you need to spend more on any occasion, you can quite easily transfer funds online onto the card.
3. Hassle-free
One can apply for a prepaid card online, and also make direct deposits. They are also easily accessible on one’s mobile devices.
4. No Penalties
Since the money accessible for use is only the amount that has been deposited, there are no repayments that need to be made. Also, there are no penalties or fees to be paid for late payments or time extensions.
5. Multi-purpose
One can withdraw instant cash from ATM’s using this card and the associated PIN. They can also be used to pay utility and other bills with it.
6. Improved Credit Rating
One can improve one’s credit rating by using a prepaid debit card. By charging a fee on a monthly basis, referred to as a Credit Booster, for a determined period of time, your card provider will show this as an honoured credit agreement in your credit file. Thereby increasing your credit rating.
By virtue of the aforementioned advantages, prepaid debit cards have gained incredible popularity. And with such benefits it isn’t hard to see why.
How do they work?
Prepaid debit cards, much like any other debit or credit card, come with their specific PIN (Personal Identification Number), but they do not let you spend from your bank account. Neither is there a pre-determined credit facility that you can use to pay for your purchases.
Instead you load an amount onto the card, and once that amount runs out, you can no longer spend anymore. You will have to upload more funds onto the card before you use again.
Advantages
Here is a comprehensive list of the advantages of a prepaid debit card.
1. No Debt
The absence of a credit facility lowers the risk of you incurring debt significantly. Since you would be spending only upto the amount that you have deposited, you could hardly over-spend. Besides inculcating discipline, it helps keep your budget tight.
2. Control
Unlike a credit card, where your card provider is setting your spending limit, you can decide how much money you are comfortable spending. And if you need to spend more on any occasion, you can quite easily transfer funds online onto the card.
3. Hassle-free
One can apply for a prepaid card online, and also make direct deposits. They are also easily accessible on one’s mobile devices.
4. No Penalties
Since the money accessible for use is only the amount that has been deposited, there are no repayments that need to be made. Also, there are no penalties or fees to be paid for late payments or time extensions.
5. Multi-purpose
One can withdraw instant cash from ATM’s using this card and the associated PIN. They can also be used to pay utility and other bills with it.
6. Improved Credit Rating
One can improve one’s credit rating by using a prepaid debit card. By charging a fee on a monthly basis, referred to as a Credit Booster, for a determined period of time, your card provider will show this as an honoured credit agreement in your credit file. Thereby increasing your credit rating.
By virtue of the aforementioned advantages, prepaid debit cards have gained incredible popularity. And with such benefits it isn’t hard to see why.
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