If you’re suffering from a bad credit rating or have credit card debt holding you back, it’s worth considering an international prepaid debit card.
Prepaid cards are a much easier and more convenient way of spending. You are also guaranteed to be approved for one of these cards, as it involves spending funds already accessible as opposed to loaning you credit.
It’s also a great option within the business sector or for families with children and students.
If you’re considering this option and are wondering precisely what the benefits of an international prepaid debit card is, read further for our 10 top points for you to think about.
But First: How Does an International Prepaid Debit Card Work?
Think of it in this very simple way: an international prepaid debit card is just like a credit card, but with “real” money on it. When you spend using the card, you are not getting into debt.
It looks the same as a credit card and is used in the same way: with a magnetic strip on the reverse, a chip, the logo on the front of the company or bank your card is from [Visa, American Express, MasterCard or Discover for example] and there is a 16 digit number across it.
Your name and the expiration date also features. You can use it with a PIN number too.
However, although this looks like a normal debit or credit card, it’s unlike both of these.
Unlike a regular debit card, an international prepaid debit card is not linked to a current or checking account. And, unlike a credit card, it doesn’t use funds via a credit facility.
You, as the owner of the card, tops it up with funds. This means you know you are spending money you already have and are aware of precisely what your limits are.
Normally there is a minimum and a maximum amount you can put onto a card in advance – this is, again, a handy method of being in control of what you’re spending.
When you reach the limit, like a credit card, you cannot use it anymore. But at least you know you have spent funds you already have, rather than spending invisible credit.
And if you need more funds, top it up. Topping the card up means you can spend more.
Major Benefits of an International Prepaid Debit Card
We’ve listed 10 great reasons why this is an ideal option for spending using a card that is neither a credit card nor a regular debit card.
1: It’s Ideal for Budgeting
This card is especially helpful if you are someone that struggles with overspending or keeping to a realistic budget within your means.
It’s a sure fire way of making sure keeping within your spending limits is achievable. This will be beneficial to you in many ways: it stops you from getting into debt and it stops the temptation of spending money you simply don’t have.
Once the cash on the card is gone, you cannot spend any more.
Great for Kids
An international prepaid debit card is an excellent option for parents who don’t want to give their children physical cash. Or who don’t want them running off with their credit card.
You will be in control and you can set a limit. And if they lose the card, you can manage the amount on it from afar.
If you want the card to be in your name, then usually card providers take requests from the age of 13 upwards.
Using a card like this for your children gives them a sense of financial responsibility and independence too. It will teach them how to budget and live within their means.
Some providers allow you to add additional cards which means they can be collated for the use of the whole family. Or used instead of a voucher for a Christmas or birthday gift.
There are also plans in place now, with the Office of Federal Student Aid, to launch a prepaid student aid card.
This initiative is a new idea by the FSA and is simplified by being described as a ‘debit card for student funds‘.
Much like a parent using this kind of card to teach their child about spending, the Education Department has promised that this card would add better customer service and help for students. This is about managing their own student loan debt. This system would also come with an app.
The premise is a similar to how disaster relief areas often use prepaid debit cards to provide victims with government funding.
Students – if the card is green-lit – would request online or at their campus for one and then transfer the funds from their student loan onto it. College costs would be covered using the card and no usage fees would be added.
2: No Credit Check Is Required
Because this isn’t a borrowing facility, you do not need to undergo a credit check in order to obtain an international prepaid debit card.
It’s true, however, that you will be required to provide ID when you are requesting this card.
One of the major benefits of this kind of card is that you’re not involving yourself in any kind of lending or debt. Therefore, a check on your credit score isn’t done, and this can, in turn, help build up your credit score in the long run.
If anything, getting one of these cards is actually a healthy way to improve your credit score.
Rebuilding credit will normally occur with cards that charge a monthly fee, which is, in essence, a type of small loan.
Known as a Credit Booster or a Credit Builder, this will be charged over a specific timeframe (a year, normally) and if you pay it monthly it is reported on your credit file. Thus, you are rebuilding on your credit history and raising your score.
3: No Overdraft Fees
An international prepaid debit card does not charge you any fees if you go over the limit – because you can’t go over the limit.
As mentioned earlier, if the money on the card is spent, it’s spent.
We’ve all been in a situation in which we have overdrawn a current or checking account slightly, which has resulted in a fee by your bank. Often these fees are large, or you may be charged each day you are overdrawn.
Some banks reorder the charges from largest to smallest, which produces a larger number of overdraft fees.
This is not the case with an international prepaid debit card.
4: Privacy and Protection Against Fraud
You will often not have to provide any personal financial information when you request this type of card. This, in turn, is more beneficial in the long run as your information will not be on any databases.
This greatly reduces the likelihood of someone stealing your identity.
It’s also useful for not being hounded by cold calling companies trying to lure you away with other finance offers.
A network-branded prepaid card also offers consumer protections too. Whether the network is Visa, American Express, MasterCard or Discover, a card that gets lost, is stolen or becomes fraudulently misused could be protected by deposit insurance or a zero-liability policy.
Some companies extend this protection while others don’t, so be aware and do your research when selecting a card.
5: Re-loading Your Card
An online facility to re-load your international prepaid debit card is often offered. This means it’s simple to do and getting more cash on the card balance is just a click away.
Some providers also offer apps for your phone. If you’re out and about and need to top the card up, this makes it even simpler and easier.
There are other options too – over the counter in a store in person – but in today’s online day to day life, digital re-loading is the most handy, quick and preferred option here.
Many providers of an international prepaid debit card offer a cashback option for purchases made on the card.
These are particularly favored when you make a purchase online. In this instance, you get even more from the use of a prepaid card.
It varies between providers, but an example of a cashback scheme might be that you earn between 2% and 6% cashback when you spend at least a certain amount in a specified store.
Cashback can often be unlimited too, which means there is no minimum or maximum spend requirement. In this case, there won’t be a restriction on how much cashback you can earn either.
7: ATM Withdrawals
You can also use your international prepaid debit card to withdraw cash from an ATM.
This is subject to the different terms of the provider, but if your card comes with a PIN then this is a feature you can take advantage of.
It’s your money on the card after all, so you should always have access to it.
A warning, however: there may be a fee incurred here, much like when you use a credit card to withdraw funds. It’s important to note that ATM withdrawals aren’t one of the common reasons people fancy an international prepaid debit card.
The clue is in the term: international prepaid debit card.
These cards are great to use internationally. Often, some cards are meant specifically for use abroad, so that you are not having to take your credit and debit cards with you when you travel.
Some cards can even be issued in specific currencies, so it’s sensible to research that your card allows the option to load it with the currency you’re planning on using on vacation.
This is almost like using a travelers’ cheque. The same principle pertains here and a card is, in fact, more convenient to the galavanting jet-setter.
9: Keeping an Eye on Things
All of the activity on your international prepaid debit card can be tracked online or via an app, which means it’s an easy way of keeping an eye on the activity on the card.
This is especially useful if you are a parent looking to keep track of a child’s use of their card.
10: Paying Wages
You can arrange for your wages to be paid onto your international prepaid debit card, meaning it’s being re-loaded and topped up automatically when you are paid.
Prepaid cards can even be as a way of paying wages as an employer.
Should your staff prefer, offering this prepaid card could be the answer to employees who don’t want to operate a bank account. With interest rates often low on current and checking accounts anyway, and people being wary of taking out credit cards, a prepaid debit card could be the answer.
Prepaid payroll cards have become very popular among freelancers, too.
It’s also an effective method of consolidating and simplifying a company’s business payments. With the facility to be able to pay bills, bonuses and travel expenses with this method of payment, prepaid cards could save your business a lot of money and time.
Get Your Financial Advice on Bonsai Finance
If you’ve got any questions about getting an international prepaid debit card or rebuilding your credit, don’t hesitate to get in touch.
Bonsai Finance helps you improve your financial situation over time by being the one-stop shop for all your financial needs. We always provide the best advice we can… even if we don’t make a penny in the process.