Prepaid cards increase in popularity
13th November 2011
The popularity of prepaid cards has increased dramatically since the recession. In order to meet new demand, prepaid card providers are starting to bring out more options. Even banks are starting to introduce their own versions of prepaid cards.“
Why Demand Has Increased
Demand for prepaid cards has increased for a variety of reasons. One of the main ones includes the fact that many people cannot get approved for credit cards. Many people are also getting turned down for standard bank accounts. Even though debit cards are not as bad as credit cards for getting consumers into debt, they still come with an overdraft facility. Therefore many lenders are turning down consumers with bad credit. Prepaid cards cannot possibly get you into debt. Therefore lenders will not carry out a credit check when you apply. All that you can spend is the money that is on the card.
There are also people who want to learn to better manage their money. Prepaid cards and credit cards can help you to do this as you constantly need to watch what you are spending. You can see exactly how much you have left and you know that once the money runs out, there isn’t any more available until you load more onto it.
If you use the Post Office to top up your card then it is completely free. There are some prepaid cards that will charge you for loading money on using different methods. Therefore you should look at the different options available to see which charge the least amount of fees. Other fees could include withdrawal fees and annual or monthly fees.
This type of card can also stop identity fraud. If you have a credit card then a thief would be able to spend a lot of money and get you into a lot of debt. On the other hand if you have a prepaid card there will only be a set limit on the card that can be spent.
A prepaid card is also safer than using just cash. You will receive a pin number that you will need to pay for things offline and to withdraw money. Finally there are no interest charges so that also makes them really popular. They are absolutely ideal for those who have struggled because of the recession.
The Potential Disadvantages
There are very limited disadvantages to these cards. However, you should be aware that your purchases will not be protected. When you use a credit card or a debit card, the things that you buy are typically protected against loss or theft for a number of days. Prepaid cards do not offer this feature.
The charges that are associated with some of the prepaid cards can also really add up as you use them. This could make them more expensive to use than a credit card in some situations.
Overall prepaid cards have increased in popularity quite dramatically since the recession. Banks and other creditors are constantly introducing new prepaid cards onto the market to keep up with demand. You should also be able to find quite a few good deals on various cards too.