One of the best-known advantages of prepaid cards over traditional credit cards is their ability to help with financial management, but there are plenty more, less-known benefits. Here are 8 more reasons why prepaid cards are worth considering:
Efficient Budgeting Tool
If you are struggling to keep your spending under control, a prepaid card may be the solution you need. With prepaid cards, once the money in the account is spent, there is no way for prepaid cardholders to spend more. This makes prepaid cards great for budgeting, and it also makes them a great choice for those who manage finances for other people—they can give access to spending money without worrying that their dependent will exceed what’s available.
No Overdraft Fees
Many people are fed up with accidentally overdrawing their checking account by tiny amounts, only to find out that they now owe a big overdraft fee, or even multiple fees. Using a prepaid card puts a stop to these excessive fees, as there is no risk of overdrawing the account.
The process of obtaining a prepaid card is much easier than a credit card application. Typically, prepaid card applications only require the most basic information (Passport, ID Card, and proof of address) from the applicants. Credit checks are unnecessary because prepaid cards are not associated with any line of credit, so your identity cannot be compromised. Because of this detail, the privacy of the cardholder is maintained, and the risk of a credit score deduction is minimized.
Prepaid cards can be reloaded using a variety of methods, and you will not be required to head to the store or bank each time you have spent all the available funds in your account. We advise all potential prepaid card applicants to check with their card providers to find out what loading preferences is available to them.
Though it seems like everyone accepts card payments in today’s digital age, there are always a handful of merchants who only accept cash. That’s not a problem with prepaid cards, as cardholders are able to access and withdraw cash from an ATM machine (using their secure PIN) for a nominal fee.
No Credit Risks
As previously mentioned, prepaid cards are not connected to any credit services, which means cardholders cannot max out their credit line. In addition, no credit checks are needed for the prepaid card application process, so your credit score will never be disturbed. Ultimately, this could be hugely beneficial for those in the process of building or strengthening their credit score for future plans, such as a home mortgage or a new business loan.