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Archive for the ‘Prepaid Debit Cards’ Category

In our highly technological and very fast society we are like a sitting duck without having a debit card. But the one draw back for some people is that most people find there selves in a critical credit situation at times who in turn make it hard to get a credit card. The first good thing to do is to be going online and look for all the various people who issue cards to people who have bad credit.

These cards range from secured cards to prepaid cards alike and they all seem to be the same. First thing to do is to know what kind of features you are looking for in a card, the preference of not having to carry cash. Plus it is also something that will improve your credit score. The next best thing to do is to compare all the benefits of most cards before you choose one.

The first fact is that prepaid cards are also like debit cards you would just put money in an account and then draw it when you are ready. Prepaid cards are accepted worldwide much like a normal credit card. Most of the times there is instant approval and also no interest on the money you spend but there are other fees. Secured car5ds look and operate just as a real debit card would; you make a deposit to an account which is also your credit limit. Next is that there are high interest balances, these are reported to the relevant tax agencies to help boost your credit score.

You may have heard prepaid cards described as pre pay credit cards. However, strictly speaking, credit and prepaid cards are not the same things.

How they are similar

Both pre pay and regular credit cards may be widely accepted, which means that typically they are convenient methods of payment to have in your wallet and carry around with you. You may be able to use them online as well as in shops, restaurants and petrol stations.

They may also be a relatively secure method of spending. If someone steals cash that you have on you, there is little hope of getting it back. However, if someone steals a traditional or a pre pay card, you may be able to cancel it immediately and stop the thief from stealing your money.

How they are different

Whilst there may be costs involved in setting up and topping up a pre pay credit card, a significant advantage that they have over “traditional”  cards is the fact that no interest may be payable. With a regular credit card, the card provider charges interest for as long as the amount remains on your card balance. So if it takes you a couple of years to pay the balance off, you may end up paying interest on the amount for that time.

With prepay credit cards, on other hand, the card provider does not actually lend you any money, so there is no interest to pay. Whilst you may have to pay a fee when you top up the card, withdraw cash or spend an amount, (charges may differ depending on the provider) that fee is paid at that point, and does not come back to haunt you month after month in the same way that a credit card interest amount may do.

Another main difference between the two types of card may be that pre pay cards may not offer the same temptation to get into debt. You may find that your spending may be easier to manage with a prepaid card because:

when your money has run out, the card will not work; credit cards let you keep spending until you have reached your credit limit; Pre pay cards may be used to “save up” for a particular purchase. You may wish to credit a card with a few pounds each week until you have reached the amount necessary for the purchase price.

Probably one of the major conveniences of debit cards is that they can be used just about anywhere that displays the card brand acceptance mark. So, for example, that could be when making online or telephone purchases or in shops, petrol stations, restaurants and some ATMs etc. However, depending on how a debit card is set up, there may be the chance of over spending on them. If you have an automatic overdraft facility on the bank account associated with your debit card, you could find yourself overspending and running up debt (which may typically attract interest charges if not repaid immediately).

One way that you may still have the convenience of plastic but without the risk of running up debt may be via using a prepaid debit card – also simply known as a prepaid card.

Prepaid debit cards

Prepaid cards are ones which you “load up” with credit before spending them. Depending on whom your card provider is, the way that you can top up your prepaid card may include some or all of the following:

- with cash at PayPoint terminals (often found in newsagents and convenience stores)
- top them up online via your bank account
- get your boss to pay your wages on to it

Depending on your needs and circumstances, prepaid cards may sometimes have a number of advantages over other plastic, such as debit cards and credit cards, including:

- There are no credit checks with prepaid cards. As the prepaid card provider is not actually lending you any money, there is usually no need to assess your financial situation. This may make them accessible to people who have had debt problems, and also to teenagers who are looking for a safer alternative to carrying cash. Although card providers will do an electronic identification check, generally there are none of the delays (or worries) that may be associated with credit check.

- There are no late or interest fees in relation to the use of the card (though there may be charges per the issue of the card or when you top it up or use it – this will depend on your pre pay card provider).

- There is no temptation to get carried away. Unlike a credit card, prepaid debit cards will not allow you to spend what you haven’t got.

Instant access to cash

Prepaid MasterCards can be used at ATMs bearing the MasterCard acceptance mark, so you can have immediate access to your money (up to the provider’s daily set cash limit amounts). PIN protected, the cards must be reported if they are stolen so that they can be cancelled. This way, the remaining funds left in your account can be secured.

Access to foreign funds

Many prepaid debit cards will permit access to your money abroad, so you can get cash out in the local currency of the place you are staying in. This means that you only take out as much as you want to spend that day, so there is never the hassle of trying to change back foreign money that you no longer need at the end of your holiday. Having a card that can be used abroad also means that there is no rushing around trying to find a bureau de change in an emergency.

Gift giving has not lost its popularity in these modern times where distant single living, busy family lifestyles and the cost of living seems to be gaining momentum. That said one often wonders how to go about finding the right gift while saving time and reducing costs.

At one time gift card giving seemed the perfect solution. While many like getting an occasional gift card to their favorite store or restaurant, other lament that such cards are impersonal, commercial and devoid of forethought.

An online business-marketing network focused on online sales and marketing notes a growing demand for gift cards among users of the Internet. To that end Fimark.net sees significant growth in store issued and prepaid gift card sales over the next 3 years.

Where store issued gift cards have made little impact, prepaid debit gift cards seem to be making up. Its many applications include business-to-business gift giving, giving to the “un-banked,” teens and students. In addition prepaid gift card are used for product promotional campaigns and marketing such as surveys. Others are offering the card for shopping sprees and for secret shoppers. Parents are using it as a way to teach budget balancing and frugality. It has proved a useful tool for corporate and household reward systems.

Prepaid gift cards are actually stored value cards. The concept entered the market in the late 1990s and is gaining momentum. Stored value cards were used as a means of employee payment in the form of payroll cards. In time stored value processors leveraged their stored value platform to develop other commercial applications, such as corporate incentive cards, employee expense cards, etc. The core providers of prepaid gift cards are traditional credit card processors who are opting to leverage their existing client base via the banking industry.

How popular are stored value card in the consumer banking sector? Of 20 banks surveyed in 2003 by the Philadelphia technology consulting and systems firm Unisys Corp., half said they were interested in issuing stored value cards themselves. And a number have dabbled in the market, including Bank of America Corp., Citigroup Inc., and JP Morgan Chase & Co.

According to IDC Financial Insights, the stored value/prepaid card will be used to purchase $290 billion of goods and services annually by 2006. With $160 billion spent on prepaid cards in 2004 and a market opportunity of likely more than a trillion within the next decade.

Regulatory issues in the US have not stopped the rapid growth of demand for this product. Branded gift cards – those featuring the Visa, MasterCard or Discover Card – are widely accepted in most stores throughout the US, including those online. Like the credit card or bank debit card the flexibility and personalized nature of a Visa or MasterCard gift card make it a well used purchasing tool anywhere that major credit debit cards are accepted.

“This alone is what makes it an ideal gift”, says Mark Askew, founder of www.greetingcards.fimark.net. To that end the site offers a personalized greeting card with gift card insert. “Gift cards have overtaken cash and paper gift certificates in terms of preference for half the US population – two-thirds of the population have bought or received one” Mark says. The Federal Reserve Bank roughly estimates some 7 million Visa or MasterCard-branded stored value cards are in circulation.

According to the fourth annual Consumer Insights Survey, commissioned by First Data company ValueLink, 52% of American consumers surveyed would prefer to give an electronic gift or spending card; 38% favored cash and 11% gift certificates. Now Internet users can order prepaid gift cards online. Online ordering save time, gas, mileage, lessens shopping and traffic incidents and yes, actually helps the environment. From the foregoing prepaid gift card giving seems to be growing into the more popular recipient pleaser.

A free prepaid debit card is a viable alternative to a credit card. If you are looking for a mode of payment which can save money and also help you manage your finances, then you can go for free prepaid debit cards. Prepaid debit cards are easier to apply compared to credit cards. If you are an employee of a business organization, you are given a free prepaid debit card. You often get these cards free as a promotional move also.

Free prepaid debit cards require no employee verification, bank accounts or past record of credit history. There is no credit line attached, so there is no worry about going past the credit limit and getting involved in a bad credit situation. You can manage your finances well and your overspending habits are curbed. Here are some of the 5 tips which can help you choose a free prepaid debit card wisely:

1. World wide acceptability: Most free prepaid debit cards are accepted at locations and shopping outlets which display the logo of the debit card company. However there may be some places and shops where which your free prepaid debit card may not be accepted. Make sure that you thoroughly know about the acceptability of the card in most of the locations you will be shopping or using the card.

2. Convenience: A prepaid debit card is just as convenient to use as a credit card. You should however know if you can use the card for online shopping and purchasing items over the phone. You can read the fine print of the free prepaid debit card company or find information from its website about the terms and conditions if any, of the usage of card online and for transactions over the phone.

3. Value added services: Your free prepaid debit card company should give you different value added services like sending your statements online or through the mail to your home or office. Some prepaid debit cards also notify you about the salary credited to your account, on your cell phone itself. Choose a debit card which can transfer funds from one debit card to the other without any problems. You can also choose a customized card where you can emboss your name or photo. Check with the debit card company if you have a certain amount for the customization.

4. Insurance: Choose a prepaid debit card which gives you insurance against loss, theft or damage to the card. You should be reimbursed for any funds that are taken out of your bank or debit card account when the card is stolen.

5. Terms and conditions: Though it is stated that a free prepaid debit card does not have any fees, you may be charged for things like card renewal or replacement of the card lost or damaged. You may be also charged a certain fee if you withdraw cash from the ATM for more than a certain number of times in day. Also a free prepaid debit card is offered as a corporate salary account by big corporate companies to their employees. After you leave the organization, the bank notifies you that the corporate account will be converted into a current account with your permission. You will be required to keep a minimum quarterly balance or so in your debit card account, otherwise you will be charged a certain amount of fee for non-maintenance of the minimum balance. You are also charged a transaction fee if you use the free prepaid debit card to remove cash on your account from the ATM location of another debit card company or bank. Find out if the above conditions are attached with your free prepaid debit card and to what extent you are liable.

The reloadable prepaid debit card is starting to come into its own. It’s not just a tool for the credit-challenged. It’s actually a great financial tool for anyone. It has many of the benefits of conventional credit cards and few of the drawbacks, for instance.

Security

Just as with a credit card, a prepaid debit card enjoys certain security benefits. For instance, if you lose your card or if it’s stolen, you can have it replaced and you won’t be responsible for any fraudulent activity.

Online Bill Paying

A reloadable debit card can make purchases at just about any website that a credit card can. That means you can make your birthday, holiday, or everyday purchases from the comfort of your home computer just as with your credit card.

Retail Store Purchases

Again, you can use a prepaid card just like a credit card for your regular store purchases. These cards are MasterCard Visa cards and so they’re accepted virtually everywhere.

What’s the catch?

Well, there really is no catch. Rather prepaid debit cards just have a different financial approach to how you spend your money. These cards must be loaded up with your money first before you can use them to buy anything whereas credit cards are more or less loaded up with the promise that you’ll pay down the road. With a reloadable prepaid debit card it’s sort of like loading up your wallet with cash first before you go to the store – think of it as an electronic wallet.

So it’s much more difficult to get into financial trouble with these debit cards than it is with their credit card siblings. That’s a very good thing in today’s wacky credit world where credit card companies play it fast and loose with interest rates, charge limits, and penalty fees. You see, these prepaid cards force you to plan better, to think your purchases through, and to know where the money’s coming from before you make the purchase (instead of after).

Lastly, with these cards you don’t have to have a long-term relationship with a bank or card issuer if you don’t want to. If you no longer want the card, you can simply spend down your balance on it and not reload it again. Then, you just walk away. No long-term balance to pay off and no penalty fees either. See how easy it is to do that with a credit card after you’ve mired yourself in a big balance.

Reloadable prepaid debit cards are starting to make noise. They’re becoming popular with not just the credit-challenged but with students, travelers, and savvy consumers who see the benefits of the card for managing budgets. Take a look yourself; they might be the right financial tool for you too.