Prepaid Cards: Your Life Essential
It is rather surprising to think that prepaid credit cards have been around in the
UK for around a decade or so but there still seems to be a lack of awareness with regards to prepaid cards, how they work and how you can make them work for you.
- What are Prepaid Cards
Prepaid cards or Prepaid Debit Cards, as they are also called, are essentially like credit or debit cards issued by your bank with the main difference being that there is no credit or overdraft facility and you need to load the card with funds before you can actually use the card. It is essentially what can be defined as a "pay before" payment mechanism - where you "pay" funds onto the cards "before" you can actually use those funds.
- The Perception of Prepaid
Consumers have not always been all embracing of prepaid cards and have at times viewed them suspiciously as the prepaid card industry as a whole, has been relatively laid back in terms of raising consumer awareness.
Furthermore, prepaid cards typically have a modest fee structure attached to them which raises further questions in the consumers mind given that consumers have become so used to the idea of free banking and not having to pay for the services from their bank. Well, the banks sure are making us pay now for the "free" services of the past.
Also, the idea of having to pay before we actually spend the funds doesn't sit too comfortably with the psyche even though we have been using "pay as you go" mobile phones for as long as we can remember.
The media has also played their part by unfortunately sending out mixed messages with regards to these cards - lauding them one day as being the next best thing to happen to consumers for convenience and safety and performing an about face the next by criticising the fees charged in the face of "free" banking.
- The Impact of Recession
The economic downturn has impacted our lives in more ways than one. Whilst mortgages and loans have become difficult to get, house prices have dropped and risen again, house rentals have risen and the average grocery basket value rose by 25-30%, jobs have also been lost.
The economy and the individual have been shaken but beyond the obvious, there have been some further developments which are impacting our lifestyles.
1. Crime: Online Crime and Identity Theft is on the rise
2. Fees: Free Banking is slowly being phased out
3. Debt: Consumers are now, more than ever before, aware of their debt
4. Savings: Discounts, Savings and a good deal are driving consumers online
- The Changing Face Of Prepaid
This is where the obvious benefits of prepaid cards are helping to change the perception of prepaid cards as a safe, secure, trustworthy and preferred payment mechanism.
1. Crime: With a prepaid card, the consumers' exposure to fraud or identity theft is limited to the funds that are on the card. With there being no link to your bank account, your savings are secure if you do suffer from fraud when making purchases online.
2. Fees: Consumers are now able to better understand how the fees charged by prepaid card providers are actually quite small in comparison to the services being provided and consumers are happy to pay a small fee for quality service.
3. Debt: With Prepaid cards, there is no overdraft or credit facility. Hence, consumers recognise that they are in greater control of their spend and impulse purchases as they can only spend what they have loaded and have available on their card. Prepaid cards as a debt and budget management tool are proving quite popular.
4. Savings: The best discounts, savings and offers are to be had online. To go online, you need to have access to electronic cash (a card) and prepaid cards are again proving popular as there are no credit checks or bank accounts required so you can get a prepaid card quickly and without hassle.
- Prepaid Cards: A Life Essential
The fact is that we are not at a stage where everyone understands prepaid cards and knows instantly what you mean when you talk about prepaid cards.
More often than not, your friends and family are still likely to confuse prepaid debit cards with prepaid SIM cards for mobile phones but this is gradually changing as the visibility of prepaid cards increases along with the usage.
Whether it is prepaid gift cards for rewarding yourself or gifting to others, or prepaid travel cards for usage abroad or money share cards for sharing money with friends and family, prepaid cards are here to stay and quickly becoming a life essential.
by: Divya Sharma
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