How Do Reloadable Debit Cards Work?

debit card

Reloadable debit cards can make your life easier if you do not have a bank account. Periodically you can add money to the card’s balance and the money can be spent as and when needed. If you are planning to get a reloadable debit card, here are a few important things you should know before getting it.


What is a Reloadable Debit Card?


A reloadable debit card also referred to as a prepaid debit card, is a special type of card that you can use to purchase anything even if you do not have a bank account. You can get these cards at grocery stores, pharmacies, convenience stores, and other retailers. 


Reloadable cards are different from the cards issued by banks. Banks issue branded debit cards when you open an account with the bank and that card can be used to make purchases or withdraw cash at ATMs. These cards are linked with your bank account so whenever you make any payment using these cards money comes directly from your account.


On the other hand, a reloadable debit card is not linked to any bank account. So, unlike a bank debit, which lets you spend as much money as you have in your account, a reloadable card limits you to the money you have loaded onto it.


How does Reloadable Debit Cards work?


Using a reloadable debit card is quite easy. First, you have to buy the card and then just follow the activation instructions that come with it. Once the card gets activated, you can load money onto it. Depending on the type of the card, you can either go online or use the phone, or direct deposit, to add balance to it. If you are not using any of these go to the store from where you purchased the card and load money into it.


You can use a reloadable debit card to pay bills, shop online, get gas or buy groceries, pay for dinner or taxi fares. These cards are like gift cards and whenever you make payments using your card the amount will immediately get deducted from the balance. These are actually cash alternatives and has a balance that is paid in advance. 


A consumer having a poor credit rating or a young person with no credit history can easily use these Branded Debit Cards to develop responsible shopping habits over time. Nowadays it is quite unsafe to carry cash, so, using a reloadable card is a safer way to carry money around as they are theft protected like credit cards. You can even gift a reloadable debit card as an alternative to cash. Moreover, these cards will also helo help you to maintain a strict budget.


The drawbacks of using a reloadable debit card:


• Prepaid debit cards come with a variety of charges like monthly fees, purchase fees, activation fees, and reloading fees. All these extra charges can affect the cash balance of the card.


• If you are drawing money from ATM or doing any foreign transaction using reloadable cards, you have to pay some extra charges.


• These cards may also ask you to pay inactivity and declined transaction charges.


Despite having many disadvantages, people prefer to use reloadable debit cards as they do not have to pay any interest or late fees. The money you are spending using these cards is your hard earn money which is not borrowed from anywhere.


So, if you do not have a bank account or have a poor credit rating you can still use reloadable debit cards. But before purchasing any prepaid card please understand the pros and cons of that particular Branded Debit Card.

Published by Shweta Pandey

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