Pros and Cons of Prepaid Cards

15. July 2020 Loans 0
Pros and Cons of Prepaid Cards

If you want to keep your spending under control, there isn’t a more guaranteed way than to move around with a limited amount of money. This is what makes prepaid cards popular. It offers you the freedom of electronic paying without getting too free to overspend. 

Like any tool we use to conduct our works, prepaid cards have many benefits with some shortcomings you need to weigh against each other to see what most fits your lifestyle and interests.

Pros:

  • Prepaid cards are great tools to curve your tendency for overspending as you can’t surpass the amount loaded in it. They also avoid the risk of overdraw associated with credit cards, so no extra overdraw fees involved. 
  • They are mostly issued by major payment companies like MasterCard and Visa which makes them able to be used in most countries and stores.
  • In case the card is lost you can report the loss or theft of your card to the issuer, and there’s a good chance you’ll be compensated according to their policy.   
  • In cases like the above, a prepaid credit card can not disclose your identity or financial information. No one can use your card as it requires a pin number. It’s also a safer way to shop online than credit and debit cards.
  • You can reload your prepaid cards in multiple ways like ATMs, direct deposit, transferring money from your checking account, etc.

Cons:

  • Prepare for a myriad of fees when choosing to use prepaid cards. Prepaid cards charge you for different activities and vary among them in value. You’ll most likely be charged for activities like activation, inactivation, withdrawal, reloading, transaction, and others.
  • You do not earn credit points when using prepaid credit cards, which won’t help you grow your credit report. 
  • Holding the prepaid cards in your wallet may make you less worried about losing it, but there are other guarantees that immune you against loss and don’t come with this kind of card like the guarantee on purchases through the card. 

Before settling on prepaid card research the kinds of cards you have in hand and compare in terms of features, fees, and level of protection offered. 

 

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