Are We Living In The Age Of The Prepaid Card?


The rise of the prepaid card is one of the most hotly debated topics on the financial community. And yet, it is by no means a novelty topic. Quite on the contrary, prepaid cards, although relative newcomers to the pay-with-plastic scene, have been around for a while now, and the popularity of this handy alternative to cash has been quietly growing as more and more people recognise the benefits of this payment method. What’s more, the growth experienced by prepaid cards isn’t restricted to Europe or the USA, but also includes the entire Asian region as well as the Arab world. This makes complete sense, as the prepaid card first gained popularity amongst travellers as a sleek alternative to wallets bulging with bank-notes in various currencies. It is particularly appreciated by students going abroad as the card can be topped up by the family back home. Let’s take a look at what, specifically, it is that prepaid cards have to offer.

Prepaid cards for travelling

Some types of prepaid cards are specially designed for travelling abroad. In some cases, these are better known as travel currency cards. Euro and dollar prepaid cards have many advantages: they can be loaded when exchange rates are favourable, they are often issued free, many have no foreign ATM withdrawal costs, they can be topped up by phone or Internet. Sterling prepaid cards are for those visiting countries that do not use the dollar or the euro, and for the global traveller who may be visiting various countries with diverse currencies. Effectively, they are reducing the risk of unfavourable currency movements, thereby providing additional safety and comfort.

Prepaid cards for peace of mind

Speaking about comfort, the main advantage of a prepaid card is that spending is limited to the amount on the card. This is bad news if you intend to embark on wild shopping sprees and rack up unsustainable debt levels. It is excellent news, however, if financial profligacy and a balanced budget are your top priorities. After all, a prepaid card obliges people to budget a little more carefully, and it is also a safety factor if, for any reason, there is any dubious anomaly whilst making online payments. Horror stories abound about people’s accounts being hacked into through giving credit card details on-line and these are by no means exaggerations; in order to limit any possible damage many have opted for prepaid precisely to avoid a like scenario – you probably should, too.

Prepaid domestic management

Day to day budgeting, in particular, can become significantly more convenient and effective with a prepaid card. This is how it works: Load a prepaid card, maybe on payday, as a budgeting aid for the weekly family shopping or for paying bills. As a result, you won’t have to worry about spending too much or running up debts and can focus on what’s really important: Finding valuable products and services at attractive prices and conditions.

Paradoxically, those families hit by the crisis that could most benefit from the type of tightly-planned domestic economy that the use of prepaid cards imposes, are those who could have difficulty in starting a prepaid budgeting programme. Trying to reconcile existing debts or credit card purchases which, say, fall at the end of the month, with investing at the same time in loading a prepaid card for future expenses, can be tricky. And yet, even if there is not much left over to load the card with, a little at a time could start things rolling.

The dawning of the age of the prepaid card

Although the prepaid card is a relatively recent payment device, its use is becoming increasingly widespread, for all the above reasons, and more. It is simple to use and the prepaid system tends to encourage budget monitoring. It is acceptable world-wide: it circulates on the MasterCard, Visa, Visa Electron and Maestro global networks, which means that although you won’t actually be able to make use of a credit card’s all but unlimited credit facilities, it will actually feel as though you’re using one nonetheless. Cards are easy to recharge, much like a mobile phone, and can be topped up at a variety of service partners as well.

Looking around it is evident that people are increasingly making payments using cards; the credit card still has the lion’s share, but prepaid payments are increasing and the advantageous prepaid card is here to stay. You can therefore be certain that prepaid cards are bound to remain a hotly debated topic for some time to come.

Featured images:

This article was written in association with Tuxedo, a leading service provider for currency cards, travel solutions for business and private purposes as well as prepaid credit card technologies.

Gavin Whittaker is a finance journalist living and working in London. He is known and appreciated for his critical position towards a purely profit-oriented perspective on economics.