Six benefits of a prepaid card

Although prepaid cards are issued by almost all deposit money banks in Nigeria, the usage is still very low compared to debit and credit cards. In fact, most people don’t know there is a payment card called a prepaid card. Many don’t know its difference from a debit card or credit card.

While the credit card and debit card are linked to a bank account (either savings/current account or domiciliary account), a prepaid card is linked to any bank account.

A prepaid card is simply a plastic alternative to carrying money around and it is often called an everyday card.

According to www.nerdwallet.com, a prepaid card is a payment card that is loaded with money by you or someone else.

A prepaid card looks just like any normal credit or debit card, with a card number, signature strip and company branding. However, it is not linked to your bank account.

It is important to note that prepaid cards are unlike credit cards, which provide you with a line of credit. This is why prepaid cards are often referred to as prepaid debit cards.

Below are some benefits of prepaid cards

Online transactions

• There is a growing fear about using your debit card or credit card to make purchases online. This is because scammers have often copied cardholders’ details to defraud them of the amount in their bank accounts later. This is why people say some Automated Teller Machines in certain places both in Nigeria and overseas are dangerous to use card. They said scammers have installed fraud devices to copy cardholder’s details.

Prepaid cards are difficult to clone by fraudsters.  Even if they can do this, the fraud is limited to the amount loaded on the card. The scammers will not have access to the money in your bank account. Prepaid cards are good to shop online. Since there’s no credit facility as a rule, if your card number is nicked by fraudsters scamming you on a dodgy website, the damage is limited to how much money you have on the card or until you realise what’s happened and ask the prepaid card company to block your card, according to bankrate.com

• Curbing spending With prepaid debit cards, you only spend money that’s loaded on the card. “That’s good because you can’t carry a credit balance,” says Howard Dvorkin, founder of the non-profit Consolidated Credit Counseling Services in Fort Lauderdale, United States. But controlling spending helps you better save for long-term goals like retirement or managing debt.
• Keeping money safe when travelling Prepaid debit cards are easily used overseas. If your card is stolen, your losses are limited to the amount on your card. You’re not stuck with a drained bank account, damaged credit or lost time recovering funds; you have damage control.
• Your teenage child If you want to give your teenager money to spend, you could load up a prepaid debit card. Many prepaid cards give you access to the spending activity. So, this is ideal for parents who want to keep tabs on their kids’ spending.

You can load your kid’s allowance or monthly spending budget onto the card online. This is convenient in the case of emergency, since you can log in to add more money to your child’s account if he should need it in a pinch while you aren’t around, according to moneysupermarket.com.

• An elderly parent you’re financially supporting If you’re financially supporting your parents, or managing their finances in their old age, you may want to give them prepaid cards for spending purposes. This is especially convenient if you don’t live near them, because you can reload their cards online. Many elderly people no longer have the need to build and maintain credit – they may live in paid-off homes they don’t intend to leave and they don’t typically make large enough purchases to require a loan.
• Someone without a bank account If you don’t have a bank account, a prepaid card is a much better option than putting your money under your mattress or carrying wads of cash wherever you go. However, we suggest you get a bank account, if possible.

Prepaid card fees may exceed any fees charged by your bank for unmet minimum balances. Plus, if you shop around, you can find smaller banks without fees.