Generally speaking, credit cards are a recognized and proven means of payment and are an indispensable part of everyday business life. However, the offer is no longer limited to the classic credit card, but also to the so-called prepaid credit cards. But what is the difference to the classic credit card? And what is a better solution for your business?
What exactly is a prepaid card where you can get it?
It is an anonymous prepaid card with a 9-digit code number. Both in terms of appearance and functionality, it resembles classic credit or debit cards and is accepted virtually worldwide and on the Internet. The cardholder can deposit money into his or her account that he or she has at his or her discretion. With the prepaid card you can:
- Pay prepaid in all service and retail outlets,
- Shopping on the Internet,
- Withdraw cash from ATMs – an individual PIN code is assigned to the card,
- Use cashback and other payment services.
There are many providers of prepaid cards. You can choose between offers from banks and offers from non-bank institutions such as Kingcard.cc, Revolut or Skrill. Before ordering such a card, it is worth doing a little research, comparing offers, checking the reviews of customers and the amount of individual fees in order to choose the best offer tailored to your needs.
Advantages of the prepaid credit card
Applying for a credit card always requires a good credit rating and a stable financial situation. However, this is not always easy to prove, especially for the self-employed, who are often not only affected by the payment behaviour of their customers, but also by insecure income conditions, especially during the start-up phase, which make the application more difficult or even lead to rejection. That is why the prepaid credit card is particularly suitable for the self-employed.
An unquestionable advantage of a prepaid card is the fact that it does not need to be personalized. This means that it is issued to the bearer – and so it is paid by the person who is in its possession. It can also be passed from hand to hand, ensuring anonymity on the one hand and security of transactions on the other. If it is lost or even stolen and the thief has it at his full disposal, the actual holder will only lose the amount of money he has credited the card with, and not all the money in his personal account.
What’s more, this type of plastic is a great alternative to other cards. Why? It can be recharged many times for any amount and at any time – before shopping, traveling or going out to town. That is why it is also a perfect solution for children and is a good introduction to learning about saving. The condition of having it is to be at least 13 years old. Prepaid vouchers are also used as gift vouchers recharged for a specific amount, which can be distributed in a specific store. However, the value of available funds cannot exceed 2.5 thousand euro.
Advantages at a glance:
- Safety and anonymity – multiple top-ups allow for reasonable transfer of small amounts of money to important items. Moreover, it is protected by PIN code or daily transaction limits in the same way as traditional debit and credit cards,
- Prepaid does not have to be personal – in practice it allows anyone who has it to make a transaction and knows the PIN code,
- Free non-cash transactions,
- A good solution for parents – thanks to daily limits, the child will not spend more than he or she should,
- Quick access to cash – money transferred immediately appears on your account,
- Spending up to a fixed amount is a good safeguard for people who have problems with saving money and keeping rigour over their finances. Its owner will not spend more than he has on his bill,
- It allows you to shop abroad with ease – a prepaid currency card is a great option for people who travel frequently around the world. It allows you to make transactions at any time: in shops or online, as well as pay withdrawals from ATMs and cashbacks,
- Unlike currency exchange offices, financial transactions in foreign currencies are not burdened with high currency conversion costs,
- In case of theft, it is possible to cancel the card,
- Prepaid can be managed with the help of mobile applications and websites,
- Loan on a prepaid card – although it is not possible to make transfers or make a deposit on a technical account, the presence of a prepaid card allows you to take out a loan for any purpose, without having a personal account.
Disadvantages of prepaid cards
Prepaid cards also have their flaws. These are payment cards, which work almost exclusively for non-cash transactions. Such transactions with prepaid cards can be carried out completely free of charge. However, all other card transactions are subject to a fee.
This applies, among others, to withdrawing funds from an ATM using a prepaid card where the technical account assigned to such a card is used. Obtaining any information such as account balance or card balance is also payable and fees are high compared to payment cards used for bank accounts. When using prepaid cards, it is also payable to purchase the remaining funds on the card, which may be necessary in the event of cancellation or expiration of the card.
Why a prepaid card?
Many people are probably wondering who needs a prepaid card. It can be used by adults, but it can also be used by children, whose parents will receive money from their pocket money or for other purposes. Plastic is also a great way to shop anonymously on the Internet. There are and finally a lot of people who want to avoid being scanned by a court bailiff, tax office, social security office or other state institutions and decide to use the prepaid option. In such a situation, a bailiff or any other institution has no right to look into the account or to take care of the funds on it.
Therefore, a user interested in prepaid opens a so-called technical account assigned to a specific card, and not to the user. And he can use it as a regular bank account – but with some exceptions. Well, the owner is not able to make transfers from a prepaid account, he will not make a deposit or take a loan. Some banks offer prepaid cards also in the form of gadgets – so they can be hidden in a key ring, watch or other items.
The prepaid credit card is a good option, especially for young entrepreneurs, start-ups and self-employed people, to bridge the start-up period and thus the phase of financial uncertainty. The advantages of a prepaid credit card are obvious and the comparison of the individual providers, the services offered, such as cash withdrawal or card to card transactions, as well as the costs for the services offered is always worthwhile.