The global financial system is changing in an unprecedented way. For example, checks were a favored means of payment between businesses a few decades ago. However, in 2015, the use of checks as a payment method dropped by 13.4%. Cash is still the most popular mode of payment in today’s society, but non-cash transactions are increasing steadily. For example, did you know that non-cash transaction volumes grew by 11.2% from 2014 to 2015? Analysts predict that digital payments will hit a volume of 726 billion annually by 2020. Prepaid cards are one of the principal drivers of this shift towards non-cash transactions. Here is everything you ever wanted to know about how prepaid cards work.
Loading Money to Your Prepaid Card
Prepaid cards are different from credit cards so knowing how prepaid cards work is critical to understanding these differences. For example, you cannot purchase a good or service with a prepaid card and then pay for it later. Instead, you have to load your prepaid card with money before you can use it. However, you can load more money onto this card than you can on a gift card. How do you load money to your prepaid card? You can load it in several ways including depositing your cash directly from your bank account to your prepaid card. Prepaid card providers also have provisions for depositing paychecks and government benefits to your prepaid card. Other channels of loading cash to this card include funding it with your PayPal account. For example, PayPal funds its PayPal Prepaid Card in addition to Green Dot and the Wal-Mart Money-Card.
The facilitation of efficient financial transactions was the concept that led to the creation of the prepaid card. In other words, the purpose of this card was to help you access your cash easily as you pay for goods and services. That is why it gives you multiple access points to your cash. One of them is your ATM. More specifically, you can withdraw your prepaid card balance from an ATM or check it. Some cards offer you this service free while others will charge you. ATM operator charges may apply as well. Alternatively, you can pay for your goods and services directly as opposed to withdrawing your cash and then paying for them. For example, you can pay vendors through their website if it has this payment feature. You can set up recurring payments as well.
3. Managing Money in Your Prepaid Card
Prepaid cards are a cross between gift cards, credit cards, and checking account debits cards. That means you can perform many things with these cards including managing your money. Doing so is not as easy as it sounds, but it is possible. For example, some prepaid cards have budgeting features including subaccounts to help you manage your cash. These subaccounts can be budgeting categories. You will not spend excessively on a single subaccount if you have limited funds in each subaccount. Saving your money is also possible if you have a prepaid card. More specifically, you can use the same subaccount feature that is present in these cards as a mechanism for saving money. Some prepaid cards offer you interest on these savings.