Why Reloadable Prepaid Cards are not Gift Cards
Despite the fact that reloadable prepaid cards look pretty much the same as gift cards, they are not in any way the same thing. Reloadable gift cards which are also known as General Purpose Reloadable (GPR) cards are different from Visa®, MasterCard®, Discover® or American Express® gift cards. Because of this difference it is important to know what cards you are getting and how they work. This way you won’t mistake an open loop gift card for a reloadable prepaid card.
Every gift card and GPR card are emblazoned with a network brand. So you cannot really tell the difference. Instead look out for the word “gift”. This will signify the card is an open loop gift card. It for reloadable prepaid cards, look out for the word, “reloadable” or “prepaid”. This will be most likely found on the card package and in some cases, on the card itself.
What Are Reloadable Prepaid Cards & How Do They Work?
Reloadable prepaid cards are basically the same as debit cards, the only difference is that funds are deposited into the cards. The card is used to access money previously loaded onto it, rather than accessing money existing in a bank checking account. Reloadable Prepaid Cards have monthly fees that are charged against the card balance also. You can find out more information on the card package in the cardholder agreement. GPR allow you to make limited purchases.
When a consumer has spent their loaded funds, they have the option of registering the debit card and upgrading it. The registration and upgrade allow consumers to continuously reload their debit card and enroll in direct deposit. To register the card consumers are required to provide personal information such as their name, address, date of birth, email address and social security number. Do not mistake this requirement for a background check because its not. Its simply to identify the person using the card as required by law. A US tax identification number or any foreign Identification Number will probably be accepted, though this depends on the card. Reloadable Prepaid Cards typically come with a monthly charge that you will have to pay. The fee is taken from the balance of the card, so do not be surprised to see deductions every month, however the fee is minimal depending on the card it can be anywhere from $5 to $10.
Why Use A Reloadable Prepaid Card
There are several reasons why using a GPR card is a good idea. Some people use it because they do not qualify for bank accounts while others use it as an alternative to getting a credit card. Here are some reasons why Reloadable Prepaid Cards are used by consumers:
Carrying cash around is not always a good idea. Most people prefer to carry a card instead of a wad of cash in their wallets. It is also safer than keeping money at home where it can get stolen or lost. Cards also make a lot of sense because they are easily replaced with the balance intact and many are FDIC insured which means your money is protected, cash is not.
- Alternative To Banks
Not everyone consider banks as their go-to option for keeping money. Managing a bank account and the numerous charges that come with it can be a hassle. Instead of using checks, they pay for their bills, services and products with Reloadable Prepaid Cards.
- Monitor Spending
Spending using a GPR card leaves an electronic trail that can be critically evaluated, however the same cannot be said for cash which is usually spent without a trace (unless you are the type of consumer that is very disciplined in budgeting). Using a debit card also limits the amount of money spent and allow consumers to carefully plan or budget their money.
- Safer Online Transactions
Using a Reloadable Prepaid Card is safer for buying things online and reduces fraud that can occur if you use a credit card to shop online.
- Avoid Credit Card Debt
Using a reloadable prepaid card means that credit card debt is totally voided. MasterCard, Visa and American Express cards are accepted at most places credit cards are so you have the convenience of using your card anywhere.
Which Card Is Right For You?
When choosing a reloadable prepaid card, it is important to know what features you need and which reloadable prepaid card offer these options. Here are some questions you should ask yourself:
- How long do you plan to use the card for?
- How many transactions do you plan to make every month?
- Do you need cash in hand?
- How often will the card be reloaded?
- Will you use a direct deposit?
- Will you make transfers to other people?
Answering these questions will help you get a clear outlook of your needs which will help you choose the right card.
How To Add Money To Reloadable Prepaid Cards?
Money can be added to a reloadable prepaid card by several means.
Direct Deposit: Consumers can load their reloadable prepaid card from their paycheck or benefits account.
Transfer: Consumers can transfer money using a mobile deposit account or transfer money from a savings or checking account into their reloadable prepaid debit card.
Retail Location: Consumers can locate participating retailers that allow them to add money directly to their reloadable prepaid card balance after swiping the card at the cash register.
If you are considering using a reloadable prepaid card, then we strongly recommend checking out our list of cards with the pros, cons and other distinctive features each card offers.