4 Ways Prepaid Cards Help Improve Spending Habits     

If you want to get all the benefits of cashless transactions, but avoid all sorts of debt possibilities, then a credit card is for you.

In the UK, prepaid cards are very popular as they offer probably the most flexible solution to cashless money exchange. They work almost like Mobile top-up packages. You pay money first with an amount to buy a package and then use it. It’s that simple.

What Are Prepaid Cards and How Exactly Do They Work?

It is easy to understand a prepaid card when you clearly know things such as recharging your mobile data service or subscribing to your OTT platform by paying money.

A prepaid card is a payment card you can use by putting money on it. You can use one of your ‘pay-as-you-go debit cards’. It carries your money in a cashless way. You put money on that card. You can then use that amount in the way of cashless transactions till the balance runs out. 

One of the prominent features of this card is that it’s not linked to your bank account. It does come with additional privileges.

You need not worry about losing extra money. Suppose you have a prepaid card that you ‘loaded up’ with 60. It is your main balance. You can use this money to buy things or make payments cashless. The amount you are paying will be deducted from the main balance. You will be left with the remaining balance to use the money. 

For example, you chose to buy something at 20 using a prepaid card. After making the payment, you will have 40 left in your main balance. 

You may choose to add more amounts. For instance, you decided to add 5 more to the remaining balance which is 40. Now, you can enjoy the main balance of 45 and use it likewise. 

***What if your product is priced higher than your balance? Let’s suppose you misread the information and tried buying a wristwatch worth 70 with your prepaid card that has got 60. In that case, the transaction will get cancelled.***

• Why Would I Use a Prepaid Credit Card?

The answer to that is flexibility. These cards won’t make stuck in a number of regulations. The following points can tell you better:

• You can create your account for free with prepaid cards.
• You can use prepaid credit cards with almost all sorts of businesses or sellers. Cash machines also can give access to prepaid cards.
• Since you put the money in it beforehand and you cannot make more payments than the set main balance, you cannot fall into debt.
• Again, the prepaid card transactions are not recorded for not being connected to your bank account. Therefore, you have zero worries about influencing your credit score.
• You can choose what amount of money to load the card.

***Yes, there are limitations. Prepaid cards come with a particular limit for the main balance. You also need to pay fees such as admin fees, transaction fees, top-up fees etc. You may also need to pay inactivity fees for a prepaid card.*** 

• Does a Prepaid Card Contribute to Improve Spending Habits?

As a matter of fact, it does. If you have used a prepaid card and used it, then you have already gained certain financial privileges. Consider them closely. Learn more about the card’s payment options. As a result, you will find many ways to escalate your spending habits and make them more meaningful. A few points below might help you out:

• You Can Save Your Credit Report from Debt Issues 

We gave a hint of this earlier. Prepaid cards are the best when it comes to credit reports and score management. Due to having a main balance and a limit as the highest amount of that balance, you cannot exceed it. Hence, you prevent the chances of being overdrawn fully. It remarkably saves you from debt. Your credit score does not get affected too.

It may sound a little odd. However, with more facilities, people can make the wrong choice. It’s a psychological phenomenon. A payment limit might help you make the right decision and be on the frugal side.

• You Might Stop Buying Things More Impulsively

Added to that, you might see a drop in your shopping spree. It is good when you want to control your shopping behaviour. Even if you do not shop impulsively, minimalist shopping is the way to be smart with money in these days of cutthroat finances.

Since your card lacks easy access to borrowed funds, you naturally cannot make ‘expensive’ purchase decisions. Your mind will stay conscious of the prepaid card’s reach, which is not extendable. This trait can control impulse spending habits. This is why prepaid cards also come in good use for young cardholders.

• Prepaid Cards Can Help You Budget 

When you are keen on allowing your prepaid card to take charge of expenses, you take an organised decision. Budgeting is possible when you have clear ideas of what you are earning and then what you are spending. Prepaid cards can give you this opportunity to make a good budget.

If you are careful with using a prepaid card, then you might be able to make the most out of it by assigning it to the Department of expenses on a positive note. You might see where your money is going better. As a result, you may achieve the clarity to make a sound budget.

• Transaction Fees Can Actually Help 

We think that the transaction fee is an extra burden. Everyone enjoys free services or privileges. However, this kind of fee might also prove itself functional.

Every time you make a transaction, you pay. It may not stop you from spending money. However, it can also help you spend less or later. That has the potential to save money.

• A Bonus Point You Should Know: Prepaid Cards Can Help Build Credit Scores 

Your credit score carries immense value in defining your finances. With that being said, a prepaid card might not sound like an effective option to build credit. However, you can still use a prepaid card to help build your credit score.

• If your credit score has fallen low, and you do not want to include new transactional details, which may make the score go even lower, then you can use a prepaid card. Your new transactions are not going to be recorded.
• By using a card of this kind, you naturally obtain a boundary to control your finances.
• Using a prepaid card can make your finances more organised, giving you more wiggle room to deal with bad credit and fix it.

However, if you have a considerably bad credit score or an extremely poor credit rating, then the best thing you can do is to take out one of the guaranteed loans for bad credit from direct lenders. 

These loans can e offered to you irrespective of the fact that your credit score is presently low. You can return the money to your lender using your income. If you can supply proof of your earnings evidentially to the lender, your loan will get approved easily.

• To Conclude

We are a direct lender organisation and have been working with countless borrowers, guiding them on finance. This post on prepaid cards has been highly requested on this platform. However, we at QuickLoansLender are ready to extend our financial reach even more. Talk to us today to learn more about how we can help you in a customised way with our flexible loan products.