Reasons Why You Should Get a Prepaid Debit Card (MoneySmart 2020)

Reasons Why You Should Get a Prepaid Debit Card (MoneySmart 2020)

A prepaid debit card gives you the benefits of both a debit and a credit card,  but without the drawbacks. Just fund your debit card so that you can use it like a credit card. Cool, right?

There are many more advantages to using a prepaid debit card, and we’ve listed them down in this article.

How does a prepaid debit card work?

It works just like a regular credit or debit card. The only difference is that you must pre-load it first with a certain amount before swiping or checking out online. The amount that you spend is deducted right away from your card balance.

Say you’re shopping online and the item that you want to purchase costs 499 PHP. Your card balance must be more than 499 PHP to be able to make the purchase. Otherwise, your transaction will be declined.

Once you use up all your card balance, you can reload with cash through your bank over the counter or online, or at ATMs and other partner establishments.

Most Mastercard and Visa prepaid debit cards in the Philippines are issued by major banks, so having a savings account to get your funds from will be required.

Other prepaid debit cards only require you to fill out an application form and pay a processing fee or an initial load.

And unlike credit cards where banks conduct a credit check to see if you’re qualified or not, prepaid debit cards have no credit checks or credit requirements.

Aside from online shopping and bills payments, you can book airline tickets, hotel accomodations, movie tickets. You can use it to buy apps in the App Store or the Play Store, as well as pay your subscription fees for different streaming services, just to name a few.

What are the benefits of a prepaid debit card?

It’s quick and convenient

All you need to do is hand your card to the cashier and swipe it at the card terminal. You don’t need to find an ATM to withdraw cash, and you don’t need to carry a large amount of cash in your wallet, too.

Because you’re charged for the exact amount, it also speeds up the checkout process because there’s no need to count change.

You can also track all your transactions easily because they are posted real time for your own accounting.

It’s a safe mode of payment

A prepaid debit card is a secure way to make financial transactions be it in-store or online. If your card gets lost or falls into the wrong hands, you can quickly report and block it to prevent further use. A replacement card can also be easily requested.

If you’re not able to do that right away, you’ll only need to worry about the money in the card, not the funds in your savings or checking account as is usually the case with linked debit cards.

Prepaid debit cards are often funded only when there’s a transaction to be made or when there is an auto debit arrangement scheduled. Even if fraudsters will use your card for shopping, they can only use whatever amount is there.

And because your prepaid debit card is good as cash, you don’t need to withdraw a big amount while you shop, dine, or travel and risk losing it by mistake or otherwise.

It’s perfect for small purchases

Whether it’s for paying your Netflix subscription, buying a premium app, or paying for weekly groceries, a prepaid debit card is convenient to use for everyday spending.

There is no minimum purchase required. As long as you have sufficient card balance, you can pay for anything with your card.

It can help you stick to your budget

A prepaid debit card can stop you from overspending and going over your budget. Unlike credit cards where you have an extra amount of credit line, there’s a lower chance of being tempted to spend more than what you have.

This prevents you from being swipe happy and using your card for mindless or unplanned purchases.

With prepaid debit cards, you can’t spend money that you don’t have.

It can be reloaded anytime you want

A prepaid debit card can be continuously reloaded or topped up with funds anytime. You can do it when you need to pay your bills, pay for purchases, or just about any daily financial transaction.

Reloading is quite easy, too, because there are many options available. Reload from your mobile device, at an ATM, or over the counter at banks and partner establishments.

It’s easy to get a prepaid debit card

If you can’t get approved for a credit card because of your credit history or because you don’t meet the salary requirements, you will have no problems getting a prepaid debit card.

Just fill out an application form, present a valid ID, and pay the fee (an initial card load or processing fee).

There are prepaid debit cards which you can link to your bank account for easy reloading. If you already have an existing bank account, applying for a prepaid debit card will be a lot easier.

It does not accumulate debts

A prepaid debit card can help you with your money management goals by allowing you to control your spending, cut down on expenses, and reduce or eliminate your debts.

There are no credit card bills that will accumulate each month. There are no interest rates on your spending. And you can only spend what money you’ve put into your card.

It can be used where credit cards are required

Most prepaid debit cards are by Visa and Mastercard, which means you can use your card anywhere they accept Visa and Mastercard. Just like a credit card.

But unlike a credit card, you should have enough load or balance to pay for your purchases.

Final Thoughts

Debit cards, whether prepaid or not, eliminate the need to carry physical cash around. They can speed up transactions and make paying so much easier. Furthermore, prepaid debit cards are accepted almost anywhere, from gas stations, convenience stores, supermarkets, boutiques, restaurants, and many more.

A prepaid debit card is perfect if you want to stay within budget and out of debt. There are no annual fees, credit checks, and salary requirements to worry about.

In short, a prepaid debit card can simplify your finances while giving you safety and convenience!

Are you already a prepaid debit card user? What do you like most about using it? Let us know in the comments!