What are Prepaid Cards?

20 May 2010 - Which Way To Pay

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What are Prepaid Cards?

 

 

In Canada, prepaid credit cards are on the market but are still relatively new compared to the US and Britain.  So, what exactly are they?

 

Prepaid Credit Cards

 

Not to be confused with a prepaid telephone card, the prepaid credit card is usually issued with one of the main credit card firms – MasterCard® or Visa®.  

 

This gives them a wide level of acceptance on the internet, in stores and restaurants as well as abroad, but there is one key difference to regular credit cards: prepaid cards do not carry a borrowing facility.

 

In other words, the money that is on the card is cash that you have loaded on to it.  Once you have spent that money with the card, it is up to you to re-load it.  This is a great advantage for people who either don’t want or can’t get a credit card.

 

Safety

 

Another great feature to prepaid credit cards is that they are a relatively secure way to spend.  For one, if you lose your card or it gets stolen, you can order a replacement.  All unspent funds on the card will be restored to you on your new card – unlike cash which is gone forever once it is lost or stolen!

 

Like credit cards, your purchases are listed out so if you need to dispute a payment you can see everything listed out.

 

There are one or two things to look out for: for one, prepaid cards sometimes carry management fees so try and go for a ‘pay as you go’ type.  Additionally there might be fees involved if you try to make a payment without sufficient funds on your card.  Always read the small print!

 

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