There is no denying the ease of using plastic money for purchases and transactions. Nevertheless, using a credit or debit card has drawbacks. With a credit card, there is a risk of overspending, spiraling into debt, and accruing high-interest fees on unpaid balances. However, if you don't keep control of your spending when using a debit card, you never know when you'll empty your bank account. So, here comes the introduction of prepaid credit cards to solve this problem.
What Is A Prepaid Credit Card?
As the name implies, prepaid credit cards are provided by different institutions and come preloaded with cash. Because prepaid money is always secure, the resolution process is significantly easier. As a result, factors like wage eligibility, credit score, etc., are not factors in issuing prepaid cards. These cards have an EMV chip, the MasterCard or Visa logo, the name of the bank that issued them, and other features similar to regular credit or debit cards. To issue Prepaid Credit cards, the issuer levies a modest cost.
Who can use Prepaid Cards?
Both businesses and people can utilize prepaid credit cards. As a result, both groups have a wide range of potential applications.
For Corporates
Businesses can purchase a large number of prepaid cards using their current account. The company might set a limit for each of the cards. They may be used for the following work:
>> To pay salaries.
>> For distributing funds for tax-free meals.
>> During festivals or events, as gift cards.
>> For executives who frequently travel to cover expenses like hotel stays and currency exchange.
>> To cover regular office expenses.
For Individuals
Prepaid cards function similarly for private users as well. They may be put to use for:
>> As an additional card for family members, children, and students, particularly when one wants to keep tabs on spending.
>> If the issuing bank permits, they can also be used as ATM cards.
>> This card can be used to make purchases on websites that ask for your complete information, such as your CVV and card's expiration date.
The Benefits of a Prepaid Card
We are aware that prepaid cards have numerous applications. However, controlling spending is the most important advantage of using a prepaid credit card. Since there is a cap on how much may be spent, it offers better control than a debit card. This is a fantastic approach to organizing your finances.
A prepaid credit card is also helpful for people who want to improve their credit score or those with no credit history.
Types of Prepaid Credit Cards
Prepaid credit cards come in a variety of forms.
1. Open Loop Cards:
These cards function like any other card and are accepted nearly everywhere there is a point of sale and other transactions at authorized banks.
2. Closed Loop Card:
These cards have limited uses and can only be applied to services that have been specifically designated. For instance, a prepaid card with a co-brand can only be used in certain outlets.
3. Reloadable Cards:
These cards can always be reloaded. A single card can be used repeatedly.
4. Non-Reloadable Cards:
Prepaid cards of this type are only intended for one-time use. Prepaid gift cards typically fall within this category.