What are Prepaid Cards
Prepaid Debit Cards or Prepaid Credit Cards, as they are also
known, are essentially like bank issued debit or credit cards
but with one or two major differences; unlike bank issued cards,
there is no credit or overdraft facility and you can only spend
using your prepaid card once you have loaded it with the appropriate
funds. Hence, they are essentially a "pay before"
solution.
The Original Prepaid Card: Budgeting and Control
Prepaid Cards were originally introduced to the UK around
the time of the dot-com boom when it started to become clear
that youngsters would be spending a significant proportion
of their time online shopping, gaming and chatting.
A few innovative businesses realised that they would need
a tool to allow these youngsters to make purchases online
and hence, prepaid cards were introduced with a relatively
low level of regulation and sophistication.
The obvious benefits of these cards were that they allowed
youngsters the freedom to manage their finances and develop
money management skills and whilst also allowing them to learn
about financial responsibility in a controlled environment
where they would not be able to overspend or get into financial
difficulty. Furthermore, it allowed parents to use online
account management tools to monitor balance, spend and transaction
history thus giving them the comfort that they were still
in control.
Hence, the original prepaid cards proved extremely popular
as tools for budgeting and control but there is a lot more
to prepaid cards than just budgeting.
Prepaid Cards Today: Benefits beyond Budgeting
As the prepaid market has matured, so have the products. We
now have specific cards for travel, money transfer, poor credit
history, shopping, gifting, youth and the use of prepaid cards
has extended beyond just consumers to businesses that are
using prepaid cards as payroll and expenses cards as well
as payout cards.
Some of the ways that growing prepaid industry maturity has
helped extend the benefits of Prepaid Card beyond just budgeting
include usage as
- A prepaid card for rewards or discounts as there are a few
exceptional prepaid cards which provide discounts across shopping,
groceries, petrol and other day to day purchases.
- A General Spend card for those who don't have a bank account,
or are newcomers to the UK and do not have a credit rating.
- As a Travel Card for those that are going abroad and prefer
to carry cash on a card or are looking for a better rate than
that provided by high street exchange bureaus.
- As a Money Transfer or Money Share card for those who wish
to share their funds with friends and family around the world
- As an Internet Payment Card for risk averse spenders who
do not wish to shop online with their credit/debit cards or
for those who do not have a credit/debit card to be able to
avail online shopping offers.
- As an Anonymity Card for those who wish to protect their
identity online from fraudsters or are keen to avoid embarrassing
bank statements
- As a Payroll and Expenses card for those employee's who
want their wages to be paid on a card and save cheque cashing
fees or those employer's who want to pay their staff using
a card instead of cash/cheque
What is clear is that whether it is the benefits of prepaid
cards for budgeting or beyond, there is definitely a good
enough reason for everyone to have a prepaid card in their
pocket.
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