Prepaid debit cards can be a smart alternative or addition to regular debit cards and credit cards as they provide the option to budget strictly and manage your money or company expenses effectively.
Before we dive into how to use a prepaid card, it’s important to know what they are and why they’re different from normal debit and credit cards.
What is a Prepaid Debit Card
You want to pay without cash but don’t know the differences between all types of cards available? A quick and easy way to tell the difference between all these cards is:
(1) Credit cards allow you to borrow from the bank and pay later,
(2) Debit cards allow you to pay now with funds being pulled from a checking account as you swipe
(3) Prepaid debit cards are similar to debit when you pay, you are essentially using your own funds but you must pre-load them into the card instead of a bank account. These cards do not help you build a credit score but they are great to start budgeting yourself, we’ll explain later.
Essentially, you add funds before your purchase with a prepaid debit card, you then pay during the actual purchase like you would do with a debit card, and if you also had a credit card you could use it to pay a bill later in the month with your own funds.
How to use a Prepaid Debit Card
Load Money in Advance
Prepaid debit cards are similar to gift cards in that money is loaded in advance. You can set up direct deposit through your bank to reload money, deposit checks at local ATMs or through a mobile app, or load cash at retailers who participate. Depending on the type of prepaid card, you might be able to use find surcharge-free ATMs across the country or pay a fee set by the owners.
Amount Limits & Fees
Specific prepaid debit cards may have fees associated with using ATMs, activating the card, or other transactions, so it’s important to check which ones are applied on your card. Likewise, make sure you know the limit of how much can be deposited or withdrawn if applicable.
Budgeting with Prepaid Debit Cards
Prepaid debit cards also offer unique and effective tools for budgeting. With this option, you can load specific amounts of money on cards allotted to various expenses.
For example, say you want to spend $50 on office supplies, $20 on coffee, and $100 on fun company activities per month. By loading either $170 into one prepaid debit card or each of those amounts into three separate cards, you can ensure that you only spend the money you have budgeted. It gives you a foolproof and safe way to control your expenses.
Prepaid Debit Cards for the Unbanked
If you are currently unbanked or are considering this option, you’ll want to look into prepaid debit cards because they can be used without a bank account. Carrying large amounts of cash around for every purchase isn’t always wise, so it’s crucial to consider these cards for larger transactions.
Prepaid cards are a convenient way for you to avoid debt. You cannot spend more than the amount pre-loaded on your card, so if you do not have enough to cover a purchase, the transaction will be declined.
Prepaid cards are a cost-effective way to receive your payroll or government benefits, without having to wait long hours in line to cash a check or having to pay hefty cashing fees to access your money. If your employer does not offer a payroll card option to receive your wages via direct deposit, you can order a Brink's Prepaid Mastercard for yourself.
Prepaid Debit Cards for Company Spending
Employers often allow their team members to make company purchases during company trips, events, and merchandise, but it can be hard to find the best solution to issue, record, or reimburse that money. Prepaid debit cards are an excellent solution for organizations looking to streamline the expenses.
Issuing prepaid debit cards to employees for specific company-related purchases is smart for two main reasons:
- Prepaid cards are safer. With credit cards or regular debit cards, employees could potentially spend large amounts on unapproved expenses. Because prepaid debit cards are limited by specific sums, they give companies more control over their budgets.
- Record purchases quickly. If team members use their own cards and provide receipts later, it can be time-consuming and confusing to reimburse them. With a company card solution, transactions are recorded immediately, and reimbursement is a non-issue.
Prepaid Debit Cards for Your Employees
If you currently pay any of your employees with paper checks or cash, you could make the switch to direct deposit through payroll cards. It’s the safest and most reliable solution for paying or reimbursing unbanked team members. These paycards work in the same way as any prepaid debit card, giving employees convenient and fast payments.
The best paycards are issued by trustworthy companies and have features that make your life easier. Brink’s Money provides prepaid debit cards with benefits like:
- Top-of-the-line security features
- Penalty-free access to funds
- Automated alerts
- Account access and control through a desktop or smartphone
- Payback rewards