How safe are prepaid cards?
Prepaid cards offer the ease and convenience of paying with plastic, but without needing a credit limit. They are useful in a variety of situations. Read on to find out more.
What are prepaid cards?
You can pay with a prepaid card, just like you can a debit card. The difference is that with a prepaid card, the money is previously loaded onto the card. Anyone can apply for a prepaid card, and there are even versions available for employees, or people under 18 to help them learn about managing money. Cards are simple to load – add money to it when you want, either online, by phone or even in-branch, depending on your card issuer.
The loaded card can then be used in any situation in which you could otherwise use a debit or credit card. Think of it as a cash equivalent, without needing to carry around notes and coins and without any worry that you will overspend or accrue an interest-bearing credit balance. With a prepaid card, you can only spend the balance that is loaded onto it. Once spent, the card is unusable until you top up the balance.
How secure are prepaid cards?
The simple answer is that prepaid cards are just as safe as a regular debit card. Moreover, there is no link to your actual bank account, which protects your personal or business account from fraud or cybercrime when you shop online, in-store, on holiday or on a business trip.
Additionally, each card is protected by a pin, just as a debit card would be. Some prepaid cards offer additional security benefits, such as purchase protection. This protection means that you are financially covered if you buy something online and receive it in a damaged or incorrect condition or if it never arrives.
What are the advantages of using a prepaid card?
You don’t need to worry about overspending with a prepaid card, because it offers no credit or overdraft facility – not even an emergency buffer. Although these types of facilities are useful for some people, the ability to overspend can also result in expensive fees. With a prepaid card, you have complete control over your cash. You set your own spending limits according to the amount of money you load onto your card. Once funds are empty, you can’t use the card again until it’s topped up.
As a business owner, choosing the right company card is essential. With a prepaid card, you can make sure that spending doesn’t get out of hand and you have better control of your various business expenses, such as client entertainment, travel expenses or fuel costs, by applying rules and limits to each card.
Carrying around cash can potentially be risky, so it helps to have a pin-protected card as an alternative. Even better, if your card is lost, the balance is preserved and you can request a new one. In a business context, prepaid company cards, such as those available from Soldo, can have purchase type and locational constraints added centrally, offering further protection against fraudulent or inappropriate use.
There is no longer a need to carry additional items with you, such as a purse or wallet, now you can take a prepaid card and enjoy the equivalent cash balance. Ideal if you are travelling internationally for a business trip and want to travel light. It’s also a handy extra to have as a backup. If you lose a source of cash, you know that you have your prepaid card as an emergency backup.
Build your credit score
If you need to build a credit score – perhaps to repair a damaged score or because you are new to credit – then a prepaid card is a useful way to show that you can be financially responsible and to build up your credit rating.
Use on holiday
When you spend money abroad, the cost of using an ATM or exchanging currency can be expensive. Your card can also be replaced if you lose it – with the balance intact – making it far safer than using cash. If you travel abroad for work purposes, you may be using a low-fee forex business card, but with a prepaid business card, you could use this both at home and overseas, eliminating the need for two separate cards.
Teach children the value of money
Prepaid cards are an excellent way for under 18s to learn more about money and to get used to the experience of paying with a card without the risk of incurring debts.
Several providers offer prepaid cards, and there are plenty of options when it comes to terms, offers, top-up modes, apps, designs and customer service. Browse online to see what type of prepaid cards and company cards are available. The latest offers and deals may include a new customer incentive.
For business owners, advanced expense management solutions such as those from Soldo offer prepaid cards and virtual company cards. Soldo prepaid cards offer the above benefits, combined with a sophisticated app and dashboard for efficient, centralised control and ease of expense recording. To learn more about prepaid business cards, check out our guide to prepaid cards for business and find out how our unique business solution can help your company better manage expenses.
In short, if you are looking to benefit from the security, convenience, flexibility and an alternative to cash, then a prepaid card may be the right choice for you.