Prepaid Credit Cards as a Flexible and Customized Solution
Prepaid cards are offered to customers with a little or no exposure to credit as well as those with a tarnished score. This product is pre-loaded and reloadable and allows holders to make payments abroad and at home. In essence, it works like a gift card because users have already paid for the goods and services they buy.
Canadian Issuers
Prepaid cards are offered by different financial institutions in Canada, including Scotia Bank, the Bank of Montreal, and the Royal Bank of Canada. They offer MasterCard, Amex, and Visa. Some banks charge load fees and monthly fees after a 1-year period of inactivity. Customers can choose from different products, including standard, travel, and business cards. The product's lifetime varies from bank to bank. RBC, for example, offers business cards with a lifetime of 3 years. There is a sign up fee as well as a maximum and minimum load amount.
Visa for Immediate Transfers
The prepaid Visa can be used just like standard cards - for purchases, direct deposit, online and offline shopping, utility bills, etc. This is a customized solution for those who are new to credit. There are two options to choose from, recurring and one-time. This is also a good choice for a sales rewards or employee incentive program. Depending on the financial institution, customers may activate the product at the local branch, online, or by phone. Issuers advertise no credit checks and no late fees. A bank account is not required to apply. Transfers to other accounts are free of charge, and money is received and sent in real time. Visa also offers generous discounts on entertainment, car rentals, apparel, hotels and lodging, and more.
MasterCard for Travel and Everyday Purchases
MasterCard also offers prepaid solutions that come with different spending limits depending on the issuing institution. Customers can choose from three varieties - gift, travel, and everyday prepaid cards. The everyday option is ideal for budgeting, paying bills, shopping, and anything else. It comes with zero liability and other perks, as well as with different limits, from $100 to $10,000. Rewards vary from bank to bank. Some issuers offer purchase rewards, referral and direct deposit bonuses, and other incentives. There are also prepaid travel solutions that are offered to frequent travelers and can be used for entertainment, at restaurants and hotels, and other venues. This option is reloadable, with money loaded online or in-store.
AMEX/American Express
AMEX offers products that can be loaded in different ways - with cash, through the customer's account, by direct deposit, and in other ways. Users benefit from the fact that there are no monthly and annual fees and no service fees. Issuers charge no transaction or overdraft fees as well. There are many benefits for holders, including advanced tickets and generous discounts on spa, accommodation, and more. This product has a maximum and minimum daily load but no minimum balance requirement. Holders can use more than one card but no more than three.
Benefits of Prepaid Products
One of the main benefits is that holders see an improvement is their credit score provided that they make timely payments. However, this is true only for products that allow holders to pay rent and utility bills, with payments being reported to consumer agencies. They are not reported to TransUnion or Experian. Another advantage is that there are different ways to obtain a card, from a major bank, financial company, drugstore, discount and retail stores, and other places. In addition to paying bills and making payments, this product can be used to receive wages and social security payments. This option is also suitable for persons who don't have a checking account.
One downside is that issuers charge different fees such as balance inquiry, maintenance, ATM withdrawal, and activation fees. Opening a savings or checking account is an alternative to using a prepaid card.