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Cómo Planificarse y Ahorrar con Tarjetas Pre-pagadas

How to Budget and Save with Pre-paid Cards

By Antonia Wang

Millions of Americans are using pre-paid cards for the convenience and security they provide. Since they do not require credit checks or prior credit history for opening, pre-paid reloadable cards are attractive to many.  "This includes an estimated 40 million un-banked or underbanked who would not otherwise have a way to participate in our card-based economy, parents of college-aged students who want a safe and secure way to give money without the risk of running up debt, and recipients of government benefits who need an efficient way to receive their child support payments, food stamps or unemployment payments" (Network Branded Pre-paid Card Association).

With many credit unions and other service providers offering reloadable cards, you have your choice of network branded cards with their unique safety and convenience features. Visa, MasterCard, Discovery and Amex branded cards are just a few. Much like credit cards, pre-paid cards can be used to shop and pay your bills online or at a point of sale. The difference is that at the end of the month you will not owe money for the items purchased if using a prepaid card. Because of this and other features, pre-paid reloadable cards can be a great tool for budgeting and saving.

Following are a few ways to use a reloadable card as a budgeting tool and to help you save:

Overdraft Fees

When using checks to pay your monthly bills, you are not only using precious time and money to buy stamps and mail the payment, but you can also incur overdraft fees if there is not enough money in your account when the check is cashed. This problem is solved when using a pre-paid card, since transactions are declined once the account runs out of money. Even in cases where decline fees are assessed on pre-paid cards, these are usually lower than the average overdraft fee of $30 to $35 (as mentioned on the The New York Times February 2012 article: "A Further Look at Overdraft Fees").

Check-cashing fees

Most pre-paid reloadable cards offer the ability to set up free direct deposit of payroll checks onto the card, as well as tax refunds and other recurring payments. Consumers who are using check-cashing services every month may benefit from looking at a pre-paid card to deposit their payments directly, saving time and money in check-cashing fees.  

Use as cash with added features

If you are on a cash-based system, reloadable cards allow you to pay only for those things you have money for, so you will not incur debt. The cards are usually protected against loss of theft so even if you lose your card, your money can be safe. In addition, many cards offer free cash back at a point of sale, which saves you money on ATM fees if that is a concern. In addition, free text and email alerts keep you informed of your account activities for an easy way to keep track of your expenses on the go.

Teenagers and college students

Whether loading their allowances or providing help for college, reloadable cards offer a convenient way for parents to track their kids expenses and keep them away from credit card debt that may hunt them beyond college. Using a pre-paid card allows you both to see how money is being spent and communicate about budgeting and needs moving forward. Another advantage for your kids is that they will be able to make purchases online when needed without using a credit card.

Alternative to money transfer services

Some reloadable pre-paid cards allow cardholders to get secondary cards that can be used for purchases and ATM withdrawals by their family overseas. Using a reloadable pre-paid card this way could be a great alternative to money transfer services that saves time and money in wiring fees. Having the ability to track international transactions and get alerts on things such as a low balance is also helpful when using prepaid cards this way.

Load with specific expenses in mind

If you are planning a vacation, you can load a regular amount unto a pre-paid card to spend at a future date. If you want to limit your expenses for a party, trip or specific budget item, loading just the amount of money you are willing to spend and using only the card for related purchases is a good way to keep yourself within budget. 

Stay informed

There are many reloadable pre-paid cards on the market. To choose the one that is best for you, compare their fees, features and offers. For more information on tips for using prepaid cards, visit nbpca.com or CrediCards.com.  Visit your local credit union to find out about their reloadable card offers.  

Published 07-26-2012.



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