Benefits of prepaid cards begin with the convenience and no credit requirements for individuals. However, individuals who are considering this as an option for financial reasons should read all the information that comes with each prepaid card. Do not forget to read even the small print because there are possible fees even with the activation of the card. The prepaid cards along with financial debt cards have become a norm in society because it is safer for everyone to use.
The advantages outweigh the disadvantages even though many have fees it is still better to have for a number of reasons which are listed below.
Benefits of prepared cards:
- Prepaid cards work like a debt or major credit card and the difference is that you are not borrowing any money.
- Availability is that many major chain stores, discount stores and pharmacy stores carry them along with the reload cards. Some of the stores may require a photo ID during purchases.
- They are great for parents who have pre-teen or teen children that need to learn
- Money responsibility.
- A specific amount can be placed on the card and there are no worries about overdraft fees.
- The account once activated online or by phone can be easily access to maintain the account. Even with the latest Mobil devices.
- The account is not linked to any personal checking or savings account.
- The benefits of prepaid cards now are used to receive government benefits like social security or IRS payments to individuals that have no financial accounts for direct deposits.
- Great to have while traveling for any age so that an individual does not have to carry any cash with them.
- Prevents over spending for individuals who are already in debt and keeping a budget.
- Great for people that are on a fixed income
- Is an easy alternative as a present to give to a college student or a person that you do not know what to get them as a gift?
- The prepaid card will also provide you with a PIN number to use at local ATM’s. You as the consumer can make the choice not to use or to waive the PIN activation.
Although the benefits of prepaid cards are plentiful there are still some disadvantages to take into consideration. Many people purchase a prepaid card not realizing that since it is not connected with a financial institution that if there is a fraudulent purchase the prepaid card does not fall under the financial compensation protocol. This means that if the card is stolen or someone who has used the prepaid card other than the person that purchased it the company is not liable for the money on the prepaid card itself. For example, say the individual has a total of $75.00 and looses the card. Another person finds the card and uses it. The individual whom originally had the card would be out of the $75.00.
Prepaid cards help credit rating
The reason that many people are beginning to use prepaid cards besides of convenience and safety happened several years ago. This happened when parts of the economy began to take a spiral downwards including several major financial institutions. People became scarred and took their money or funds out so they would be able to control their fate. The economy is slowly recovering all over the world.
Improves individuals overall credit rating
- The annual fee or maintenance fee shows that an individual honors the prepaid agreement in a given year. Then is reported to the credit card agency boosting the rating.
- Credit score /rating is needed for unsecured or secured loans so this helps during the application process and provides normally a lower interest rate for the consumer.
Prepaid debt cards can be used like a master card or visa and is accepted almost everywhere that a regular credit card. The only difference that it has is that it has cash on it and the amount of it depends on what you want on it. Also if you need cash you are able to go to an ATM to receive actual monetary funds. You still might have to pay a fee at the ATM for the financial/ bank service but it is usual no more than five United States dollars.
Many banks today especially in the United States have ATM fees and some stores are also beginning to charge a fee when the consumer requests cash with a purchase. In the long run the fees that prepaid cards to have are no different from the banks. All fees do add up eventually but you maintain any account the benefits of have a prepaid card still can provide a consumer with flexibility of purchasing and the convenience that they want in todays busy on the go lifestyle no matter where you live.