Find Out Everything You Should Learn About a Prepaid Card

New technologies have helped systems use innovative methods and ideas to streamline procedures to deliver high-quality service. Payment mechanisms also follow the same path developing advanced tools for a quick and seamless payment experience.

The FinTech industry has seen and continues to see some ground-breaking innovations over the past ten years. A prepaid card is one of those innovations. More and more people around the globe are using prepaid cards today. Why are they so desirable? It most likely has to do with security, convenience, and adaptability.

What is a prepaid card?

Called prepaid debit cards, prepaid cards are stored-value cards that need money added to them before the user can make purchases. These cards can then be used in a physical store or even for in-store purchases. With a stored monetary value, a prepaid card is similar to a debit card, except for one significant distinction it limits your spending.

You will run into different denominations of prepaid cards, like prepaid debit cards and store-value cards, when it comes to using them. You can easily have this card, for there is no need for a bank account or a credit check. Users can earn rewards and take advantage of lucrative brand offers by adding money to make purchases on these cards.

How does a prepaid card work?

If you are in Malaysia, you should be 18 years of age and have a valid Malaysian address to get a prepaid card. The card issuer, especially a bank, will open an account once you are issued the card.

You need to load money onto a prepaid card before you can use it. Only the amount that is available on your card can be spent. You can shop and dine with it as it is accepted by millions of merchants worldwide. The amount you use gets reduced from the balance as you use your prepaid card. You can keep using your prepaid card until you have money in the account. With more purchases, your remaining balance gets further reduced.

For instance, if you have deposited RM1000 onto your prepaid card and paid RM150 for a car rental. You will have RM850 available for purchases after the payment. After using up the entire balance, you can reload the prepaid card with new funds to continue using it. The minimum amount you can reload is RM10, and the maximum is RM10,000.

It is easier to manage a prepaid card than a credit card. There is no need to be concerned about monthly payments, due dates, late payments, or penalties. The amount of money you hold on your prepaid card is your spending limit.

Some key reasons for using a prepaid card

Businesses and consumers find prepaid cards the preferred payment method for several reasons.

1. No need to carry cash

It is not safe to carry cash with you when traveling or shopping. You may lose it if somebody steals it. Unlike cash, it is not easy to steal money online. You are protected financially if your prepaid card is lost or stolen. Stealing physical money is much simpler than digital money, so you should exercise caution.

2. Accepted everywhere

As you know, prepaid credit cards are accepted everywhere, just like regular credit cards. All you need to do to use a payment terminal is look for the logo of the organisation that manages your cashless transactions, which is typically VISA or MasterCard. Further, using a prepaid card does require any specialised equipment or complex procedures. You will have access to perks and rewards that other cardholders do.

3. Have your budget in check

Prepaid cards are a useful tool for managing your spending. Since you can only spend the money available on these cards, you have to be more selective when making purchases, which helps limit your chance of overspending.

In a way, prepaid credit cards work similarly to prepaid mobile phone lines in that you can only spend up to the amount that is stored on them. For example, if you load RM500 onto your card, you can only use it to make purchases totalling RM500. The amount you can store on these cards has a cap, though.

It’s not easy to manage money, for you need to develop a savings habit, pay attention to your finances, and, most essentially, be determined. A prepaid card helps instil financial discipline and motivates you to develop sound money management practices, making your life easier. People who use prepaid cards do so primarily to gain control over their expenses, fees, and debts.

4. Don’t affect your credit history

There is no need to carry out any prior banking information, credit checks, or reviews of credit histories before issuing these cards. Further, they do not affect credit scores.

5. Multiple currency support

Not all prepaid card providers or merchants accept every currency. Before choosing a suitable card for your business, check the currencies that the card can back, the exchange rate, and any fees.

To conclude, you can find the most suitable prepaid card by being mindful of the above points.