Prepaid cards are a great and safe way of paying for goods and services without having to carry around large amounts of cash.
They’re particularly useful for the youth market as it helps parents teach children about money in a responsible way. They look exactly like debit or credit cards except they’re not linked to any bank account. The prepaid card has no value until it’s loaded with cash.
There are a wide variety of ways you can top up your card, and many allow you to top-up online while others will let you top-up at many stores. Once you’ve used up the money on your card by purchasing gifts in store or online, the value on the card will eventually hit zero. The reason that this is a safe way of spending money is that the only value this card has is the amount of cash that you put on it.
There are literally dozens of companies now that have a prepaid card available, such as Berkeley Payment. You can apply online via their website or by filling out a form and sending it off through the post. After a few days you’ll receive your card along with the pin. You’ll receive instructions with the card on how to use it and the charges involved.
You can also use your card to withdraw money from bank machines. Beware though, as most will charge you for each time you withdraw. This is one of the downsides of a prepaid card.
One of the advantages of a prepaid card is when it comes to online purchases. It helps you keep track of what you’re paying for and stops you from paying too much since you always have to top-up. Statistics show that if you use a top up card for payments you tend to spend less money. For this reason prepaid cards are a good choice for young people learning how to control their spending, as well as shopaholics in general.
Depending on the cards you get you’ll either have one which is a Visa or a Mastercard. There are a few others but these two are the most popular. Both Visa and MasterCard are widely accepted in almost all online stores and shops. This makes the prepaid card universal.
Some cards come with liability protection. There are essentially two types of cards available; open loop and closed loop. Open loop cards are “branded” cards usually provided by financial institutions that are heavily regulated. Closed loop cards are provided by merchants and are only usable at their stores. Try to avoid closed loop cards as you will be limited when it comes to the number of places you can use it. Open loop is much more widely accepted.
Some cards also have other fees associated with them. Some have small annual fees, so it’s important that you read the terms and conditions before you sign any application.