Money Advice

How to Use Reloadable Prepaid Cards for Budgeting and When It Makes Sense

I’m the primary to admit that I’m not at all times trustworthy to my personal price range. While I’m frugal by nature, I’ve weak spots, just like the occasional good meal out or dwell sporting occasion. Some months, these vices make it tougher for me to attain my monetary targets.

The comfort is that I’m removed from being alone on this predicament. For quite a few causes, many customers discover it tough to stick to their month-to-month spending budgets. But what if there have been one other method?

Budgeting With Reloadable Prepaid Cards

Believe it or not, there is one other method. For many customers, together with yours actually, a reloadable pay as you go debit card could make it simpler to preserve self-discipline and management spending. Prepaid playing cards aren’t bank cards. They’re additionally not conventional debit playing cards, that are tied to your checking account and thus have entry to all of the funds contained inside.

Prepaid playing cards begin with a zero steadiness and should be loaded with money earlier than getting used for purchases, payments, and different bills. When the cardboard’s steadiness drops to zero once more, you’ll be able to’t use it till you load extra funds onto the cardboard (comparable to a gift card). In different phrases, all pay as you go playing cards have a built-in brake on spending. That makes it simple to load the cardboard with solely the funds you want to cover your day-to-day bills for a given interval, normally every week or month, and scale back the chance of overspending.

With this in thoughts, a pay as you go card is right for managing the day-to-day bills you take care of over the course of a typical month, together with groceries, clothes, utilities, and leisure. You can use your pay as you go card at any service provider or service supplier that accepts the cardboard’s marque, i.e. Visa (in different phrases, a Visa-branded pay as you go card is nice anyplace you see a Visa emblem on the register or on-line checkout web page).

Accordingly, for some it may be an appropriate substitute for a conventional debit or bank card. Moreover, many playing cards have on-line, mobile-friendly account dashboards that replicate checking account dashboards, permitting you to carry out primary capabilities equivalent to money transfers and steadiness checks.

However, pay as you go card balances don’t earn curiosity, so your card isn’t an appropriate substitute for a financial savings account. In truth, apart from medium-term bills, equivalent to holidays and vacation procuring, it’s not advisable to use a pay as you go card to save money in any respect. For emergency funds, training financial savings, and retirement financial savings, different automobiles – equivalent to conventional financial savings accounts and IRAs – are better-suited.

I lately took the plunge into month-to-month expense budgeting with reloadable pay as you go playing cards. I sized up the professionals and cons of utilizing pay as you go playing cards to management spending, took a tough take a look at my personal day-to-day bills, and teamed up with Visa Clear Prepaid to enroll for the Green Dot® Reloadable Prepaid Visa® Card, one among a number of playing cards a part of the Visa Clear Prepaid program. After a quick studying interval, I created and accomplished a 30-day budgeting problem that noticed me utilizing my Green Dot® Reloadable Prepaid Visa® Card for my day-to-day family bills over the course of a month.

Here’s what I realized earlier than, throughout, and after this personal finance journey.

How Prepaid Cards Work

Options & Costs for Loading and Reloading Your Card

When you first get your card, you want to load it with money. There are a number of methods to achieve this. Some issuers, together with Green Dot and others within the Visa Clear Prepaid program, waive charges for the primary load, no matter the way it’s completed.

For subsequent hundreds (generally known as reloads), charges generally apply. These fluctuate by card issuer, card kind, and load technique.

Load/reload strategies and prices embrace:

  • Direct Deposit. Direct deposit from an employer or different earnings supply (equivalent to college or authorities company) is normally the most cost effective technique. Importantly, many playing cards (together with these inside the Visa Clear Prepaid program) provide the possibility to deposit half or your whole paycheck onto your card, so you’ll be able to management the precise quantity you obtain – and thus the precise quantity you’ll be able to spend – every pay interval.
  • In-Store Deposit. Bring money to the register at a taking part retailer, swipe your card, and be in your method (generally known as Reload @ the Register). The typical value is $4.95 per load.
  • Check Deposit at Walmart. You can deliver a pre-printed verify (equivalent to a paycheck or authorities profit verify) to taking part Walmart service counters and deposit the steadiness instantly onto your pay as you go card. Check Walmart or your card issuer’s web site to decide whether or not your native retailer presents this service. Walmart verify cashing charges apply.
  • Online Transfer From Another Prepaid Card. Some pay as you go issuers, together with Green Dot, permit you to switch funds from one other pay as you go card by means of your account dashboard. This is nice in case you have a number of pay as you go playing cards or need to obtain money from a buddy or colleague who additionally makes use of reloadable pay as you go playing cards. These transfers are normally free. (They’re at all times free with Green Dot playing cards.) However, you do have to pay different charges (equivalent to buy and month-to-month upkeep charges) on every further card.
  • Bank Account Transfer. You can switch instantly out of your on-line fee account by offering your account quantity or debit card quantity. There’s usually a delay of 1 to three business days with this technique.

Other Important Card Fees

In addition to load/reload charges, pay as you go playing cards include sure different charges. Many are widespread to conventional checking accounts and debit playing cards. Since it’s in your monetary curiosity to reduce your publicity to these charges, choose for a pay as you go card that’s clear about when to count on a charge and when not to in the midst of your regular price range spending. For occasion, playing cards a part of the Visa Clear Prepaid program – together with my Green Dot Reloadable Prepaid Visa Card – have clear charge schedules overlaying all potential charges.

  • Card Purchase Fee. Depending on the way you acquire your card, chances are you’ll be charged a purchase order charge that ranges from $2 to $5, relying on issuer and buy location. Online purchases usually don’t include a charge. For occasion, Green Dot’s in-store buy charges vary from $2.95 to $4.95, however on-line purchases are free.
  • Monthly Maintenance Fee. Virtually all pay as you go playing cards cost a month-to-month upkeep charge, comparable to the checking and financial savings account upkeep charges charged by some banks. Fees are usually within the neighborhood of $5 to $6. My Green Dot® Reloadable Prepaid Visa® Card’s is $5.95.
  • Out-of-Network ATM and Bank Teller Withdrawals. Many pay as you go playing cards, together with these which can be a part of the Visa Clear Prepaid program, belong to fee-free ATM networks that waive charges for money withdrawals. However, like most banks, card issuers usually cost for out-of-network withdrawals. These charges normally vary from $2 to $3. Green Dot costs $2.50. Some pay as you go playing cards additionally cost for in-person money withdrawals at financial institution branches. Green Dot costs $2.50 for this service as properly.
  • Balance Checks. If you want to verify your card steadiness at an ATM, you might have to pay a small charge. For occasion, Green Dot costs $0.50 per steadiness verify. You can keep away from this charge by checking your steadiness out of your cell machine, which is at all times free.
  • Lost Card Replacement. Most issuers cost for lost card replacements. These charges usually vary from $4 to $10. Green Dot’s is $4.95.
  • Foreign Transactions. Like bank card issuers, pay as you go card issuers typically add an additional cost for transactions made exterior the United States, usually assessed as a small share (2% to 4%) of the transaction complete. Green Dot’s overseas transaction cost is 3% of the full transaction quantity.

It’s necessary to word that some pay as you go playing cards might also scale back or waive these charges altogether whenever you make a minimal variety of month-to-month transactions, carry a minimal steadiness, or meet different {qualifications}. For occasion, my Green Dot® Reloadable Prepaid Visa® Card’s month-to-month upkeep charge is waived once I preserve a minimal steadiness of $1,000 or make 30 transactions per thirty days.

How to Get and Load Your Card

Getting your reloadable pay as you go card takes only a few minutes. There are two primary methods to achieve this:

1. Online
Most issuers permit you to enroll for your card on-line. That’s how I signed up for my Green Dot® Reloadable Prepaid Visa® Card, a course of that took me solely 5 minutes. To enroll on-line, merely navigate to the cardboard issuer’s web site and observe the prompts. You want to enter primary personal info, together with your title, contact information, and Social Security quantity. You additionally want to create a username, password, and safety questions as a way to entry your account.

After finishing the sign-up course of, you’re given a short lived card quantity and instructed when to count on your bodily card within the mail (usually one to two weeks). Before exiting the sign-up wizard, you can even print a direct deposit type to give your employer or deposit funds from an outdoor account or card. The large downside of on-line sign-up is that you simply don’t get a bodily card immediately, although you should utilize your short-term quantity for on-line and in-store purchases (in-store, the cashier merely has to punch the quantity in manually). The large benefit is the shortage of a enroll charge.

2. In-Store
Cards which can be eligible for the Visa Clear Prepaid program can be found at a number of nationwide retail chains, together with 7-Eleven, Walmart, Kmart, Rite Aid, CVS, Walgreens, Family Dollar, and Dollar General. Bring your preliminary load in money and instruct the clerk to add it to the cardboard steadiness, much less any buy charges. You’re then given a short lived card, with a everlasting card to observe within the mail in a single to two weeks.

It’s necessary to word that with each on-line and in-store card purchases, your short-term card’s steadiness routinely transfers to your everlasting card upon arrival. You don’t have to fear about spending each final cent in your short-term card earlier than it comes within the mail.

How to Activate and Use Your Card

After receiving your short-term card – and once more after receiving your everlasting card – you want to register and activate it earlier than making purchases. Simply go to your card issuer’s web site and observe the prompts. For the Green Dot® Reloadable Prepaid Visa® Card, you simply choose “Register/Activate,” then choose how you bought your card (on-line or in-store). Provide the cardboard quantity, safety code, and your personal info. You could also be requested to present a PIN and safety questions if you happen to haven’t already.

As quickly as your short-term or everlasting card is registered and activated, you’ll be able to start utilizing it immediately at any service provider that accepts Visa playing cards, together with utility suppliers and different invoice issuers, and to withdraw money at ATMs or financial institution branches.

How Prepaid Cards Work

Tips for Day-to-Day Budgeting with Prepaid Cards

1. Use Direct Deposit for More Convenient, Lower-Cost Loading

Many reloadable pay as you go playing cards include a number of reloading choices. For occasion, amongst different strategies, the Green Dot® Reloadable Prepaid Visa® Card permits you to reload your card by way of direct deposit (from an employer or different earnings supply), money deposit at a taking part service provider, checking account switch, and switch from one other pay as you go card.

Direct deposit is free, whereas different reloading strategies include charges that may vary north of $6 per load. In truth, direct deposit is among the many least expensive reload choices for many reloadable pay as you go playing cards. It’s additionally probably the most handy, because it comes instantly out of your earnings supply and doesn’t require the middleman step of acquiring money or arranging an digital funds switch. If you’re consistently on the go, it’s good not to have to fear about penciling in one other obligation in your crowded schedule.

2. Choose a Card in an Expansive ATM Network

Most reloadable pay as you go debit playing cards permit you to withdraw money at ATMs. But not all belong to intensive fee-free ATM networks that don’t cost for withdrawals.

If you frequently require money, and even if you happen to simply make the occasional ATM withdrawal, make ATM community membership a key consideration. Signing up for the Green Dot® Reloadable Prepaid Visa® Card paid off large time on this division, as I now have fee-free entry to greater than 20,000 MoneyPass ATMs. Other playing cards a part of the Visa Clear Prepaid program belong to equally broad networks: for instance, the PNC SmartAccess® Prepaid Visa® Card has fee-free entry to greater than 7,300 PNC-branded ATMs.

3. Budget for the Most Important Items First

It’s exhausting to use pay as you go playing cards to preserve monetary self-discipline if you happen to don’t have a transparent deal with in your day-to-day bills. The greatest method to make sure that you do get this deal with, even as new bills come up or disappear, is to account for your most necessary bills earlier than transferring on to less-critical areas of your price range.

You could make your expense price range utilizing a web based budgeting instrument equivalent to Mint, a primary computer program equivalent to Excel, and even old style pen and paper. Simply make a class for every of the next and assign particular person bills (equivalent to particular payments) a line merchandise inside the acceptable one:

  • Recurring Bills. First, put aside your recurring month-to-month payments, each mounted and variable: lease or mortgage, cable, Internet, electrical energy, fuel, water, childcare, and so on. Since you already know precisely or about how a lot every of those units you again, you’ll be able to pen their precise prices into your price range forward of time (with some wiggle room for variable bills, equivalent to electrical energy and fuel).
  • Purchase Expenses. Set out what you count on to spend on purchases every month. Split buy bills into two classes: important and discretionary. The former contains issues like groceries, clothes, faculty or work provides (together with electronics), and transportation. The latter contains issues like leisure, personal electronics, and non-professional dues (equivalent to health club memberships). Though your price range hopefully has room for some discretionary spending, concentrate on important spending first.
  • Special Budget Categories. Lastly, account for particular targets or price range classes, equivalent to upcoming holidays and vacation spending. It’s okay if you happen to don’t have any particular financial savings targets for the time being. That simply means you will have extra left over on the finish of the month for different bills.

Once your bills are set, arrange direct deposit to your reloadable card such that you simply obtain solely the quantity you want to cover them (plus a small cushion) every pay interval. Direct the rest to one other vacation spot, equivalent to a financial savings account. If you discover that you just can’t cover your primary bills with this stage of funding, or that you’ve an excessive amount of left over on the finish of the interval, you’ll be able to modify your deposit quantity in future pay intervals.

4. Control Your Kids’ Budgets

Prepaid playing cards have twofold worth for mother and father. First, they’re nice for holding children’ weekly or month-to-month allowances (and for older children, the identical precept applies to dwelling bills whereas away at school). Simply load every little one’s allotted quantity at a taking part service provider’s register – which you are able to do whereas procuring – or switch the steadiness from your personal pay as you go card.

Secondly, and relatedly, pay as you go playing cards have great academic worth. When you first give your little one the cardboard, allow them to know the weekly or month-to-month load quantity and clarify how the cardboard works (as soon as they spend their allotted funds for the interval, there’s no extra money on the cardboard). If they’re frugal and finish the interval with money nonetheless on the cardboard, congratulate them and let it roll over. Talk a couple of good introductory lesson on the thrill of saving and the worth of money.

5. Budget and Save for Special Expenses

Many folks use reloadable pay as you go playing cards to save for particular bills, equivalent to an upcoming trip, vacation procuring, or a house enchancment project.

The greatest method to do that is to prepare direct deposit (a free load possibility with Visa Clear Prepaid) from your employer or different earnings supply and work out how a lot your complete deposits quantity to every month. Next, decide what you’re saving for, how a lot it prices, and your timeframe for reaching this objective. Then decide how a lot you want to save every month to meet this objective, and set that quantity apart earlier than making the remainder of your month-to-month price range. Lastly – and it is a important step – switch these set-aside funds to a separate pay as you go card. Repeat this switch each month till reaching your objective.

Note that particular bills are separate and distinct out of your retirement financial savings, tuition and training financial savings, and emergency funds. It’s by no means a good suggestion to use a lot of these financial savings to fund particular, non-emergency financial savings targets, regardless of how necessary they appear.

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