A prepaid card is a kind of card on which money is loaded. It is used by people to pay for various things. Prepaid cards sometimes are also called store-value cards because you can load the balance ahead of time and then use the money at many stores and online.
How does a prepaid card work?
A prepaid card works just like a debit card. The difference is that the card is not attached to any bank account. You can buy a card from a store or a company.
In some cases, you may purchase the card that is loaded with a particular amount. For instance, if you pay $100 for a prepaid card, then you can use the card to spend $100. In other conditions, you can buy a card and add money to it by yourself.
With a prepaid card, you can buy things in stores, withdraw cash from an ATM, pay all kinds of bills, and even deposit checks. Once you use up all the money on the card, it stops working. If you want to use it again, you have to reload the money.
However, prepaid cards charge high fees. You may be required to pay money when you buy the card, when you add more money to it, and when you purchase something or use an ATM with the card. Sometimes you have to pay a fee every month just to keep the card. Besides, although using prepaid cards requires no credit score, it also does no help to improve your credit history.
Despite the high fees, prepaid cards are still quite popular because for those who are not fond of carrying cash, a prepaid card is rather convenient and easy to get.