10 Reasons to choose a prepaid card

Prepaid cards still have the reputation of a second-class credit card for persons with weaker credit-ranking. This apparent shortcoming is however based on one of the strengths of a prepaid card: the holders of prepaid cards are spared the danger of self-indebtedness which exists in case of classic credit cards – and still they can enjoy all the advantages of a regular credit card. In this blog post, we explain what other advantages a prepaid card can provide.

1. Full cost control

One can never get into debt with a prepaid credit card, debiting is possible only if there is sufficient credit on the account. A prepaid card is suitable for anyone who wants to control his or her expenses and not fall into the debt trap.

2. Independence from income

Classic credit cards are issued only if one has a regular income. This makes a lot of sense because these authorize the user to a certain credit line, which as far as possible needs to be covered in time by the income. The prepaid card is appropriate for those who do not work, such as learners, welfare beneficiaries and retirees or employed persons who have low or irregular income, such as students, people with mini-jobs or even freelancers. The holders of this card can recharge and use it normally for payments depending on their available budget.

3. Independence from credit-ranking

Conventional credit cards are normally issued only to those who have no negative credit (Schufa) entries and can prove an overall positive credit-ranking. Those who had to file for insolvency or those whose business is subject to seizure will not receive a credit card. Insolvency procedures are a tedious process and negative credit (Schufa) entries also have long-lasting repercussions. With a prepaid card one can make payments even during ongoing procedures.

4. Security against theft and abuse by online criminality

If criminals or hackers come into the possession of credit card data, the holders of regular credit cards need to act fast, so that they do not lose their savings, where possible. In the case of prepaid cards, credit card theft and credit card abuse cause far less damage than in conventional cards. In the case of prepaid credit cards, the holders have access only to the available credit. Security-conscious online buyers can recharge their prepaid card only with the amount needed for a particular purchase.

5. Easy payment in online shops

Online payments are more and more simple. However, Paypal, Klarna and direct transfer are still a long way from being accepted everywhere. For certain online merchants, it is still difficult to integrate modern payment methods. However, what is almost invariably possible is credit card payment. With a prepaid credit card, one can pay online in any shops. The only thing that might stay in the way of a purchase is recharging your credit.

6. Independence from geographical location

When moving abroad the holders of classic credit cards are obliged to hand in all credit cards and request new ones abroad. However, if you possess a prepaid card, this inconvenience is history. It maintains its validity regardless of your place of residence.

7. No new debts

The greatest disadvantage concerning a credit card is the danger of self-indebtedness. One will quickly live beyond his or her means and pay for purchases leading to indebtedness and also interests payable to the card issuer. With a prepaid card, one can no longer get into debt, because payments can only be made with the credit existing on the card and one cannot take on additional credit – full cost control.

8. Worldwide acceptance

Credit cards are accepted anywhere in the world – prepaid cards too. Restaurants, stores and service providers – millions of cash-free acceptance points worldwide accept credit cards – the right currency is always available. A prepaid card is also appropriate, for instance, for children traveling alone. Thus, the parents are in full control of the costs, the children do not carry a lot of cash on them and, in case the prepaid card is lost or stolen, the damage is limited.

9. Withdraw money anywhere and at any time

Cash can be withdrawn from any ATM. This is attractive especially when traveling. However, as a holder, one must be careful here: different fees are charged in this case, depending on the provider. In most cases, however, withdrawing cash from a credit card abroad or from other bank terminals than those of the issuing bank is more convenient than with the EC card.

10. Online banking

Prepaid cards allow simple online banking. Payments can be comfortably made from the mobile phone or PC. In case of XPAY BENTO, for instance, customers receive, from the companies using the XPAY card, a modular payment front-end, which can be optionally enhanced with functions such as bonus programs, online shops, etc. Prepaid cards offer many advantages to their users, advantages which you can provide to your customers via the XPAY card. Arrange a personal appointment here.

Info-Box: Prepaid cards are less suitable for:  

Continuous payments
Prepaid cards are less suitable for regular payments, such as monthly contributions and subscriptions. If there is no credit on the card, then the payment can be missed and thus overdue fines might be charged. However, for this purpose you can set up standing orders from the account onto the credit card. The extent to which the roundabout approach via the credit card under the threat of popping payments is advisable is an open question.  

Frequent cash withdrawal
The advantage of credit cards is clearly related to direct cash-free acquisition. Card issuers and credit institutions apply different fees in this case. Those who like to have cash on them should do so using their EC card and at their house bank, in order to avoid possible additional costs.

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