Love to Shop Online? Consider Using a Pre-paid Card
You load a set amount of money onto the card (Prepaid Wallet), and you can only spend what you’ve preloaded
There are credit cards and debit cards. There are also pre-paid cards.
Prepaid cards (PPC) are financial tools that allow you to load a specific amount of money onto them, which can then be spent online and @ POS. Prepaid cards are the easiest way to do digital transactions for an individual. “This can be used for a variety of purposes, such as online shopping, paying bills, or making purchases at physical stores like malls, restaurants, or movie theatres. Essentially, they function much like a debit card, but the amount you can spend is limited to the preloaded balance,” says Amit Nigam, Executive Director and COO of BANKIT, a fintech company.
Unlike credit or debit cards, they are not linked to a bank account or a credit line. Credit cards allow you to borrow money from a bank or issuer and pay it back with interest if unpaid on time. They require a credit check.
“However, debit cards are directly linked to your bank account, and transactions withdraw money immediately from your account. Whereas Prepaid cards are not linked to any bank account or credit. You load a set amount of money onto the card (Prepaid Wallet), and you can only spend what you’ve preloaded. Hence, prepaid cards are more secure and give more control to the user,” says Nigam.
Benefits Of Using A Pre-paid Card
“Since you can only spend what is loaded, they are great for managing expenses and preventing overspending. They do not require a credit history, making them accessible to more people. If lost or stolen, they can be blocked quickly, and many providers offer zero-liability policies,” says Nigam.
Agrees Abhishek Kumar, founder and chief investment advisor at SahajMoney, a financial planning firm. “Prepaid cards help in sticking to a budget and not going overboard with shopping.”
Also, he adds that prepaid cards are also a great way to gift someone so that the recipients have the flexibility to buy items of their choosing instead of receiving the same set of items from multiple people.
What To Consider
Some cards have limits on how much can be loaded, spent, or withdrawn in a given period using the mobile app for these controls. You need to be aware of that. Be aware of fees for card activation, reloading, Fuel payments, or using the card at ATMs. Also, depending on the card type, you may need to complete KYC (Know Your Customer) formalities to increase usage the Card's holding and spending limits.
