If you are not interested in borrowing money using traditional credit cards, prepaid cards offer you a functional alternative. You don’t go into debt and you don’t owe anything. You are spending your own money that has simply been transferred to the card. Take some time to compare prepaid credit cards to ensure you get the best card, for the best price. Once you have the card in hand, here are five tips for using it efficiently.
Protect Your Card and Your Pin Number
Just like a regular credit card, you want to keep track of your prepaid credit card. If it were stolen or lost, another person could potentially use it to make purchases. Having your pin number would make it even more convenient for someone to take advantage.
Keep your card in a safe place. After you set up your pin number, do not tell anyone what it is. This should be a group of four numbers known only to you. Do not write it anywhere on the card.
As you compare prepaid cards, look into which companies offer you some form of protection for your card. If it is lost or stolen, some companies will allow you to cancel the card. If you had a remaining balance, it can be transferred to another card. There is typically a fee associated with a new card and a transfer.
Keep Track of Your Balance
Unlike a regular credit card, you need to keep track of your balance at all times. Some people choose to keep a ledger (often used for check books) to keep track of the amount you’ve spent and the amount you have left.
If you are at the store and need to pay for something that is $10 but only have $5 on the account, the purchase will not go through. However, if you know that you only have $5, you can ask the cashier to split up the payments, charging your prepaid credit card $5 and paying the rest with cash or another card.
Be Aware of the Fees
As you compare prepaid credit cards, pay attention to the fees that companies charge. Some cards are free to purchase as well as the first time you loan money on to it. Others charge a fee just to purchase the card.
There could be monthly charges or non-use charges. When you add money to the card, you may be required to pay a percentage to the prepaid credit card company. It is worth shopping around to find a card that will work best for you and your budget.
Set Up an Automatic Money Transfer
If you never want to run out of money on your card, set up an automatic transfer each week, each month, or even twice a year. The money can be transferred from your checking or savings account at the bank. You can add money only when you need it, but the regular deposits help you establish a routine. It also prevents you from being stuck in an awkward situation, with less cash than you thought you had.
Other Uses for a Prepaid Card
As you compare prepaid cards, you may find that this is a great way to utilize and keep track of your money without running the risk of going into debt. Take your prepaid card on vacation to ensure that you don’t overspend.
Give a prepaid card to the teenager in your family. This is a good way to teach them a lesson about money, spending and credit. There are plenty of uses for your prepaid credit card.