Many people don’t know how prepaid cards differ from credit cards because they look alike and you can use them in the same shops. However, they are different down to the basics, and I’ll tell you how.

Important facts about prepaid cards

The first thing to know about prepaid cards is that you need to load them with cash before spending. Also, you can’t spend above what you have loaded as there is no credit feature.

Another thing is that they aren’t connected to any bank account but work as stand-alone accounts.

To get a prepaid card, you don’t need credit checks and you can simply load the card and spend the same amount you loaded to make purchases using the card.

Just like bank debit cards, prepaid cards have PINs, and some can even be used to withdraw cash at ATMS for a little fee, as well as accept direct deposits.

Advantages of prepaid cards

Prepaid cards have several advantages for those who choose to use them, and we’ll look at some of these advantages.

• You don’t need a bank account to use

You can use a prepaid card instead of operating a bank account, and in situations where you can’t access your account. You can make payments using the card, and in some cases, even leverage features like ATM withdrawals, online payments, and mobile checking.

• No credit history required

Since prepaid cards don’t have credit features, you don’t need to undergo credit checks. So, if your credit history isn’t stellar or you haven’t built one, prepared cards are perfect for you.

• Almost the same acceptance rate as credit/debit cards

You can use prepaid cards for in-store and online purchases just like debit or credit cards. However, it isn’t unusual to find some agencies and hotels that reject these cards, but they aren’t the majority.

• Prevents overspending

If you’re prone to spending more than your budget because you’re using a credit card, you can correct that with a prepaid card because you can only spend the exact amount of funds you had loaded into the cards previously and nothing more.

How many types of prepaid cards are there?

There are two major types of prepaid cards, which are open loop and close loop prepaid cards.

• Open loop prepaid cards

These cards come branded with popular networks like Mastercard, Visa, Discover, and American Express. These tags mean that you can use the card wherever retailers accept cards of these brands, whether debit or credit cards.

• Close loop prepaid cards

These cards are often called store gift cards and can only be used at specific stores and merchants. They aren’t as versatile as the open loop cards.

A prepaid card with a difference: A Suits Me Prepaid Card

A Suits Me prepaid debit card is somewhat of a combination between a prepaid card and a debit card with the features and advantages of both. This card is connected to a current account and can be used with a mobile banking app and for online banking.

This prepaid debit card handles almost everything your usual debit card would do without going to the bank. It has something for everyone, including people with poor credit history, migrant workers, those who don’t have proof of address to set up mainstream bank accounts, as well as tourists, international students, and UK Expats.