If you're searching for a convenient way to purchase items in stores or online without the worries of carrying cash or credit cards, a prepaid card may be your answer.
They are available from MasterCard, Visa, and American Express.
How They Work Using this card is similar to using a gift card.
Before you begin, you make a deposit of cash.
You decide how much money to deposit.
As you make purchases, ATM withdrawals, or pay bills, the balance declines.
You can reload at anytime.
And you will not have monthly bills because you "pay as you go.
" Who Can Benefit These are great for anyone who doesn't want the responsibility of keeping track of monthly bills.
Parents can give their children this instead of cash.
Besides being an easy way for children to make purchases on their own, they also help parents educate children about smart money management.
They guarantee approval, so consumers with bad credit can use them with no problems.
And travelers might want to use them instead of carrying large amounts of cash.
The Advantages The financial institution that issues your card will replace it if it is stolen.
You are also protected against unauthorized use.
You control how much money is on available.
Thus, you will always know if you have enough money to make a purchase.
This is an effective way to limit spending and develop financial discipline.
If you decide you would rather make a cash purchase, you can obtain cash from an ATM.
It can also be used for bill payments at any establishment that accepts online or phone transactions.
Fees Visa, MasterCard and American Express offer several plans with varying fees.
Make sure you read and understand the agreement before you select one.
There is usually a monthly transaction fee, and other fees are charged according to the structure of the plan.
A plan may include fees for activation, ATM withdrawals, and individual purchase fees.
Each fee is deducted from your cards current balance.
In sum take the time to educate yourself and read the fine print before applying for any card.