A pre-paid card allows you to combine the convenience of a credit and debit card because it has the ability to allow you to set your spending limit according to your budget.
A pre-paid card is a card that is loaded with funds prior to its usage. It works like a usual chip and pin card except that it is not tied up with your bank account. Prepaid cards provide you with a convenient method of payment because there are no financial charges.
You have the added advantage of avoiding debt because all purchases are technically already paid for. When you get the card, you are able to transfer however much money you would like to have available to spend on the card.
Pre-paid cards may be provided in local or foreign currency. The prepaid cards are usually re-loadable. Whenever more money is required on the card, the cardholder deposits more money in their card account.
Although most prepaid cards do not charge transactional fees, the other fees that may apply are:
- Monthly fees
- Application fees
- Over-limit fees
- ATM fees and more
Are Travel Cards Pre-Paid Cards?
Travel cards are pre-paid cards that are loaded with funds so as to be used when you travel. They offer a great opportunity to earn free points that can be redeemed for airfares, hotels or cash. The card issuing companies partner with various travel brands such as the KQ Msafiri Card (or just simply offer their own card) to entice consumers to sign up in order to receive bonuses, loyalty points, special discounts, and more.
Most people take travel cards on holiday or for business trips because they are a convenient way to carry money and can be particularly useful in emergencies. However, most card issuers charge a foreign usage fee when you use your card abroad, so it can be quite expensive. Frequent travelers should, therefore, look for cards with either no or low foreign usage fees.
What You Should Know About Pre-Paid Cards?
As a pre-paid card holder, there are certain transactions you cannot use it for. This is especially related to transactions where your card would normally need to be pre-authorised before the full cost of your purchase is known.
If you lack the self-discipline to manage your finances well, a pre-paid card is the best option for you. This is because unlike a credit card, it is impossible to spend beyond your means. Your maximum limit is the amount that is deposited on the card.
Therefore, they help you to develop a sense of control because you set your spending limit, and you use it accordingly. It can be especially helpful for ensuring you maintain your budget.
Make sure you make the most out of your card by doing your homework and comparing different pre-paid cards from different banks. Be keen to look out for the various fees that you may not be aware of so that when you do arrive at the decision you are informed.
We hope this article was helpful? Let us know your thoughts and your experience with pre-paid cards in the comment section below.