Most likely you’ve seen prepaid cards at the drug store chains, supermarkets, and pretty much all major big box stores. They’re usually on display along with gift cards, but the two are not the same.
Meaning, a Visa gift card is NOT the same as a Visa prepaid card. The main difference lies in the fact that a prepaid card can be reloaded, while a gift card can not.
Prepaid cards have other uses and can be reloaded. Most cards use the Green Dot MoneyPaks you see on the same display for reloading.
So, What Do People Use Prepaid Cards For?
While prepaid cards are accepted anywhere debit cards are accepted, they are considerably different than credit cards. In fact, they don’t affect your credit in any way. No credit check is needed to get a prepaid card. You’re essentially just loading money you already have onto the card. This also means it will NOT help your credit in any way either.
Prepaid cards can be useful mainly in the following ways:
- When you can’t get approved for a credit card. There are certain situations where you can’t use cash or you simply prefer not to carry too much cash around. If you can’t get a credit card, a prepaid debit card can help you in these situations.
- Even when you can get approved for a credit card, you may not be financially or responsibly secure yet to risk going into credit card debt. While restrictive, using a prepaid card will insure you won’t start borrowing money you may not be able to pay back anytime soon.
- Other common uses for prepaid cards is for employee spending and allowances for your kids/teenagers.