Prepaid card, debit card, credit card... all of these terms are used interchangeably in our everyday lives. However, each of them means something slightly different. Ever wondered what the difference actually is between each of these payment products?
Here, we break down what a prepaid card is and how it works!
So, what is a prepaid card?
A prepaid card is a card in which money is already placed inside in advance. Unlike a debit card, this means that when you make a payment, the money is not taken away from your bank account, but actually directly from the card itself.
This also differs to a credit card, where the money that you spend is not directly taken from your bank account, but is instead borrowed from the bank and needs to be paid off by the end of the month.
What can you do with a prepaid card?
Unlike credit cards or some debit cards, prepaid cards do not allow you to overdraw your account as you need to top up your card to be able to pay with it. For this reason, prepaid bank accounts are a safer alternative to credit cards if you want to avoid overspending, especially as banks often charge high monthly interest.
Once the balance is fully used, the owner of the card can choose to top it up; in this case, you can go to an ATM or alternatively use an app like JiPay.
While many prepaid cards don’t make you pay transaction fees that you might have when using a credit card, some may still make you pay monthly fees for usage of the card, as well as balance inquiry fees when you check this at an ATM. JiPay however does not charge a balance enquiry fee as you check your JiPay card’s balance on the application itself.
Similar to credit cards with their points system when you make payments, users of some prepaid cards can even benefit from cashback; for each transaction, they get rewarded by receiving part of the amount they paid back into their account.
Who can use prepaid cards?
A prepaid card can be a great tool to manage your own or someone else’s spendings. For example, a parent can provide this card to their child in order to view their transactions, but also to give them their monthly allowance. Based on their child’s spendings, parents will be able to give advice on what to spend on, and what to limit spending on. Prepaid cards offer children a first approach into the world of managing finances.
Employers can also use a prepaid card to give to their helpers when they pay for any of the household’s expenses. This makes life easier for the employer, who can easily see the transaction history and top up the card when the balance is low, and for the helper who doesn’t have to worry about managing bundles of cash or keeping receipts.
Helpers can also use a prepaid card to receive their salary, so that they can remit money to their family back in their home countries. With the JiPay Personal Account, helpers can also put some of their salary aside in a savings pot so that they don’t spend it all at once on their card!
To sum it up, everyone can obtain a prepaid card! Anyone who spends money on a regular basis and wants to manage their spending can become a prepaid card owner to enjoy all that it has to offer.
Request for a free prepaid card from JiPay today!
JiPay is an app for everyone to manage their household expenses, no matter where they are.
It comes with a free prepaid Mastercard to do your shopping.
Click here to get the app!