Since the birth of prepaid cards, consumer have understood it as a more convenient and much safer alternative to debit and credit cards. Not only does it serve the purpose of being a substitute to carrying and using cash, prepaid cards positively differs from traditional bank issued cards as it helps consumers nurture a healthy spending habit. Prepaid cards do not provide overdrafts and only allows the card holder to spend whatever amount they have pre-loaded into the card, making it a true “pay before” solution.
Despite this difference, prepaid cards work and operates just like any other credit and debit cards, enabling the user to purchase goods and services via online platforms or in-stores. It can be used pretty much anywhere that accepts credit cards and also allows cash withdrawal at ATM machines. In addition to these attributes, prepaid card holders can also enjoy soft benefits which traditional credit cards may not necessary provide, such as effective financial protections and management. Here are five ways in which your finances can be well protected by using prepaid cards.
Prepaid cards are fast expanding to be the primary choice for payments, especially for those who travels overseas. All that needs to be done, is to buy one and pre-load it with the holiday funds before departure. It can then be used just like any other bank issued cards allowing the prepaid card holder to avoid problems such as carrying around a stack of physical foreign currency during the trip.
An advantage of using these cards during your travel is that it is safer. Prepaid cards serve similar functions to cash, but assist in financial protection. Potential risk will be limited to the fund on the card at any given time, should the unfortunate incident of your card being stolen or lost, you simply just need to contact the prepaid card provider and have it blocked immediately.
Limiting Online Risks
Using prepaid cards for making online purchases assist to mitigate the potential risk of consumer frauds. According to the Financial Fraud Action UK, the rate of online consumer fraud increased by more than 25% last year alone.
Prepaid cards can prevent and reduce risks like this by limiting the capacity of potential losses to the value pre-loaded into the card. Unlike traditional credit cards, the prepaid card is not linked to your bank account or a line of credit hence in no way whatsoever would a case of consumer fraud damage the user’s credit rating or related deferred ramifications.
The application process for a prepaid card does not involve a credit check. This is one of the major difference from a credit card application where at least one mandatory credit check is required. Prepaid card applications will not leave any search footprint on your credit report which is often reviewed and used by future lenders to conduct a credit rate calculation. Having too much search history on your credit report may lead to deferred issues further down the road, especially at important moments such as taking a housing mortgage or business loan.
Credit facility is not applicable for prepaid cards, which also means that card holders are only allowed to spend whatever is pre-loaded on the card. Not only does this assist in debt prevention for those who are too busy to monitor their finance, this attribute can actually help those who are bad at managing their finance nurture a sense of responsible spending and financial managements. In addition, this makes prepaid cards a safer option than traditional debit and credit cards as in the case of wallet being lost or stolen, the risk is only limited to the fund capacity that is on the card during that time.
Having total control
Prepaid cards promote individual disciplinary with money and spending habit. As the amount pre-loaded in the card is the limit eligible for the card holder to spend, which is proven to be highly effective when it comes to financial management.
All prepaid cards start with an initial balance of zero. This apparatus needs to be loaded with funds prior to making purchases, paying bills or covering other expenses. In the situation where the card balance drops to zero, a reload is mandatory before the card holder can use it again. This in-built spending brake helps the user to manage their daily expenses and putting you in total control over your own finance.
Visit www.t24blackcard.com for more information on prepaid cards.