How do prepaid debit card works?

Prepaid debit cards work exactly in a similar fashion as that of the credit card. But there is one difference between them and that is while you do shopping with the credit card you actually borrow the money from the bank but in case of prepaid debit card you use to spend your own money.

Hence, in case of the prepaid debit card, you have to deposit the money upfront before using it and you can do shopping only for that amount of money which you have loaded in the prepaid debit card and you cannot cross that limit. In case of credit card since you can borrow the money from the bank for shopping which you will have to pay later. In the market you will get a lot of financial institutions or banks which offer prepaid debit card and City prepaid card is one of them which provides outstanding service.

How the Prepaid debit card

The looks and feel of the prepaid debit card are exactly the same as that of the standard debit and credit card. It is a kind of plastic card that has a magnetic stripe and a smart chip for the security purpose. Prepaid debit cards use either Mastercard or Visa payment network. For using the prepaid debit cards you have to swipe the card if you are at the retailer but if you are shopping online then you have to enter your card number and other details.

Unlike a credit card, you can easily get a prepaid debit card regardless of any credit history. When a prepaid debit card is issued the issuer does not check your credit since in this care you will not be able to borrow the money from the issuer rather you will spend your own money. Since a prepaid debit card does not say anything about the borrowing or repaying habits of the customer the card companies have nothing to report to the credit bureaus. In simple words, if you use the prepaid debit card it will not influence your credit score. Thus a prepaid debit card does not help you in establishing or improving your credit.

Prepaid debit cards are available in the market in a variety of costs. So before you purchase a prepaid debit card it is always advisable to read and understand the cost involved in it. Apart from that, it is also necessary to check all terms and conditions so that no deduction takes place without your knowledge.

Benefits of using a prepaid debit card

The prepaid debit card is not beneficial for everyone and it is specially made for some specific persons. You can reap the benefit of a prepaid debit card only if the following condition applies to you:

  • Poor or no credit history: Prepaid debit card is beneficial for those who usually have a poor or no credit history. Since with prepaid debit card, you do not borrow money and the card issuer does not check your credit score you can easily get it without any difficulties.
  • Avoid debt: Unlike a credit card, the use of a prepaid debit card helps you to avoid going into debt. The good thing about the prepaid debit card is that you can only spend that much of money which is loaded into your card. That means with a prepaid debit card you can spend money as per your capacity. It works best for teens, college students or people who usually have a fixed income and have to manage all their expenses with that particular amount.
  • Avoid bank account fees: With a prepaid debit card, you can also check your balance or other bank details. You can also use your prepaid card for various services such as paying any bill online and mobile check deposit without requiring a full-fledged bank account. Thus, with a prepaid debit card you can easily avoid the bank account fees.

These are some essential benefits that you can avail from the prepaid debit card. Nowadays traveling with cash is becoming very risk day by day. Instead if you load all the required money on your prepaid debit card it will save you from any kind of fraud or theft.

I am content write and technical expert at a tech organization. I also do the computer science education through the college. Love to solve the techncal issue through my writing and want to help people to solve their.

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