Pre-paid cards offer a tool to help you make budgeting easier. They are a great way of weaning yourself off the credit cards and they offer flexibility and convenience.
A pre-paid card works by allowing you to load funds onto a reloadable prepaid card. Once you’ve got money loaded onto it, you can access them by swiping the card at an ATM, or using it to purchase goods and services in the same way that you might use a traditional credit card.
Pre-paid cards offer flexibility that allows you to shop online and conduct any transaction where you would normally require a credit or debit card. Provided you have deposited enough money onto the card before hand, this allows you to take advantage of lower prices that can’t be paid for in other ways.
By switching to a pre-paid card instead of using a credit card, you can save on interest charges, and will avoid late fees or over-the-limit fees. This means that over the course of a year by spending via your pre-paid card instead of a credit card you could save literally hundreds of £’s.
Pre-paid cards can also be used to help you track your spending. With many pre-paid cards you can receive daily balance alerts via e-mail or text which mean that you can keep a very close eye on how much money you have available. Unlike using cash, it’s much easier to see what you’ve been spending your money on too which for many people makes it an easier way to learn budgeting techniques and stick to them.
If you’re paid monthly, and find it hard to budget one week at a time, with a pre-paid card, you can create a living expenses budget by loading a fixed amount on to the card at the beginning of the week to pay for things, and then keeping an eye on that amount through the week by e-mail or text as mentioned above. This means that you won’t be tempted to dip into your bank account so easily as you will have planed in advance how much you have available to spend, and will be able to easily allot yourself a fixed amount each week without having to avoid using plastic.
Another type of budgeting that this type of card is great for is to help you teach your teenage kids smart money habits. By loading their allowance or spending money on to a pre-paid card they learn the value of using a card, but without being faced with crippling debt.