Recently, prepaid debit cards are gaining popularity. In truth, they can help save household money, because the holder of such a card can spend exactly as much as he put on it. But before running out to make such a savings tool, here are a few things you should know.
Places where you can use a prepaid debit card depend on the type of card itself. This type of payment instrument is divided into two parts: open and closed loop. Open, usually identified by the logo of their system, such as MasterCard and Visa, they can pay in all places where they accept cards of such systems. Closed “plastic” can be taken only in a certain store or for the purchase of certain goods. Outwardly, they look like transit cards, such as a public transport pass.
The possibility of replenishment
Although in recent times there are less and less of these, but for now there are cards that cannot be replenished. Used the full amount and the card can be disposed of. But in most cases you will be able to use a prepaid debit card again and again. As a rule, it can be replenished in several ways, it can be a direct deposit, a visit to a special store or through an ATM. However, in some cases, issuers charge a fee, which can be quite different, depending on the method of replenishment.
In addition to the commission that may be charged at the time of replenishment of the card, there may be additional fees under the contract. Such as monthly or annual payment for using the card, commissions for withdrawal of funds or purchase at certain points of sale. Sometimes even there is a fee for card activation or balance adjustment. These and other fees may not be indicated on the beautiful packaging of your new card, but you can always clarify all the nuances on the organization’s website or by calling.
The protection of such cards is less than that of banks.
Prepaid debit cards are generally not protected from all those types of fraud, like regular debit or credit cards. Some still offer decent types of protection.
Don’t forget that prepaid debit cards and credit cards act differently. On the prepaid card you need to put money that you can spend in consequence. When you put money on a credit card, they lie there in the form of collateral, you are still using credit.
Prepaid Debit Card and Your Credit History
You do not borrow money in order to make purchases; you just spend your own money, which you previously put on the card. It turns out that the use of such cards will not affect your credit account. You have not shown to the banks that you can repay the money you borrowed on time.
If you want to improve your credit history, then it is better to choose a suitable credit card for you, become an authorized user of another card, consider such an option as a guarantor for a loan or take a loan to an Payday Loan.