Prepaid cards look like credit and debit cards with a card number, magnetic strip and chip and offer the same ability to purchase products and services. Importantly though as they are not linked to a bank account or credit facility you can only spend the cash balance that has been preloaded onto the card. We now take a closer look at what prepaid cards are.
Prepaid cards enable you to load the card with cash, and then use it to withdraw cash or make purchases.
Once you use all the cash loaded and the balance reaches zero, you can’t use the card to withdraw any more money or pay for any more goods.
This means there is no risk of running into debt – there is no credit or overdraft facility and you can’t spend more cash than you have loaded on the card.
In many respects prepaid cards work rather like a pay-as-you-go mobile phone – load the card with cash and spend what you load, as with a PAYG phone, load the phone with minutes and use them until they’re gone.
You can buy and load the cards at a variety of outlets, including high street banks and the Post Office as well as other retail outlets and non-traditional financial institutions.
You can preload most cards at ATMs, over the internet, via text messaging or by phoning your provider.
Generally prepaid cards are issued under the Visa, MasterCard, Visa Electron or Maestro brand, established and widely accepted brands.
Other prepaid card companies include
O2 Money prepaid card – Cash Manager and Load and Go
Rational FX prepaid card
Freedom prepaid card (was White Eagle)
Bread prepaid card
We’ll next take a look at What are the advantages of Prepaid Cards.
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