Well recognized and established in the United States and receiving much more worldwide attention, the prepaid industry is really becoming a global market. Prepaid cards were initially introduced as a much more efficient alternative for paper-based gift certificates, they now stand in for an extensive payment type that extends over a broad gamut of applications. This global market does offer enormous opportunities.
These prepaid card technologies are very convenient systems of accessing funds, kind of similar to credit and debit card, however without the danger of overspending.
Prepaid Cards – How Do They Work?
A prepaid card, like debit or credit cards, is used to pay for certain things. You purchase a particular card with money already in it from a retail store or online after which you could make use of the card for spending up to the maximum amount of money in the card. Below are a few reasons why many make use of prepaid cards:
- A prepaid card is a convenient means of paying for certain things if you aren’t carrying any cash with you
- You don’t owe any bill as you are making use of money you already have
- Credit score or history isn’t needed when using a prepaid card
How Are They Different From Debit Cards And Credit Cards?
Not like debit cards and credit cards, prepaid cards aren’t connected any of your bank account or credit union. When using a prepaid card, in general, you are spending money that you already have which is loaded into the card. At times, this is termed as “loading money onto the card”.
When using a credit card, you are actually borrowing money to pay for your purchase. With a prepaid card, as mentioned, you’re spending money you already have which is loaded to the prepaid card beforehand.
There is a limit in the amount you could spend when using a prepaid card, which is the amount you loaded onto the card previously. Debit cards allow you to spend the amount of money you have on your linked bank account. In a certain way, prepaid cards then help prevent overspending.