Many people don\u2019t know how prepaid cards differ\nfrom credit cards because they look alike and you can use them in the same\nshops. However, they are different down to the basics, and I\u2019ll tell you how.<\/p>\n\n\n\n
The first thing to know about prepaid cards is\nthat you need to load them with cash before spending. Also, you can\u2019t spend\nabove what you have loaded as there is no credit feature.<\/p>\n\n\n\n
Another thing is that they aren\u2019t connected to any\nbank account but work as stand-alone accounts.<\/p>\n\n\n\n
To get a prepaid card, you don\u2019t need credit\nchecks and you can simply load the card and spend the same amount you loaded to\nmake purchases using the card.<\/p>\n\n\n\n
Just like bank debit cards, prepaid cards have\nPINs, and some can even be used to withdraw cash at ATMS for a little fee, as\nwell as accept direct deposits.<\/p>\n\n\n\n
Prepaid cards have several advantages for those\nwho choose to use them, and we\u2019ll look at some of these advantages.<\/p>\n\n\n\n
You can use a prepaid card instead of operating a\nbank account, and in situations where you can\u2019t access your account. You can\nmake payments using the card, and in some cases, even leverage features like\nATM withdrawals, online payments, and mobile checking.<\/p>\n\n\n\n
Since\nprepaid cards don\u2019t have credit features, you don\u2019t need to undergo credit\nchecks. So, if your credit history isn\u2019t stellar or you haven\u2019t built one,\nprepared cards are perfect for you.<\/p>\n\n\n\n
You can use prepaid cards for in-store and online\npurchases just like debit or credit cards. However, it isn\u2019t unusual to find\nsome agencies and hotels that reject these cards, but they aren\u2019t the majority.<\/p>\n\n\n\n
If you\u2019re prone to spending more than your budget\nbecause you\u2019re using a credit card, you can correct that with a prepaid card\nbecause you can only spend the exact amount of funds you had loaded into the\ncards previously and nothing more.<\/p>\n\n\n\n
There are two major types of prepaid cards, which\nare open loop and close loop prepaid cards.<\/p>\n\n\n\n
These cards come branded with popular networks\nlike Mastercard, Visa, Discover, and American Express. These tags mean that you\ncan use the card wherever retailers accept cards of these brands, whether debit\nor credit cards.<\/p>\n\n\n\n
These cards are often called store gift cards and\ncan only be used at specific stores and merchants. They aren\u2019t as versatile as\nthe open loop cards.<\/p>\n\n\n\n