When shopping online, have you ever been scared to enter your credit or debit card details and wished there was a way you could pay without giving away your bank account details? Have you been confused about buying a gift for someone and wished you could just give them the money so that they can pick anything of their choice? Are you the kind who does not like to carry cash in hand and wished there was another way of paying for your purchases? If these are the kinds of questions that are bothering you, we have just the perfect answer for you – Prepaid Cards.

What are Prepaid Cards?

Prepaid cards are simply cards that come pre-loaded with money. You can use the card to pay for your purchases up to the limit on the card. Once the amount on the card gets exhausted, you can top them up just like you recharge your mobile phone credit. Prepaid cards are also sometimes referred to as prepaid debit cards, but unlike debit cards, these cards need not be linked to your bank account.

Prepaid cards look like a normal credit or debit card and will bear a Visa, MasterCard, or Rupay logo on them. These cards take away the hassle of carrying cash around and serve a variety of purposes, such as gifting solutions, fulfilling foreign currency requirements, etc.

Do I need a Prepaid Card?

You need a prepaid card if you wish to enjoy any of the below-given benefits:

• Do online transactions without having to worry about your credit or debit card details being exposed to fraud. Since the amount on the prepaid card is limited, even in the worst case of someone using your card details, the loss will be minimal.

• Pay for any purchases that you make offline. If you are someone who does not like to carry cash around, a prepaid card can be your everyday alternative for cash. However, please note that you can only use them at outlets that accept prepaid cards.

• Give pocket money to your teenagers. Instead of giving pocket-money to your kids in the form of cash, you can load money into a prepaid card and give it to them. This way you can keep a check on their spending.

• You need not worry about having poor or no credit score to avail a prepaid card.

• Prepaid cards can be helpful when you wish to gift someone but have no idea of their preferences. It gives freedom to the receiver to buy a gift of their choice using the gift card.

• Employers can use prepaid cards to pay the salaries of employees who do not have a bank account.

• Travel to a foreign land without having to worry about the local currency. Prepaid forex cards can be a real boon during your travel abroad.

• Curb uncontrolled spending. A prepaid card aids you in planning your expenses and spending within your budget.

What are the types of Prepaid Cards?

Based on the issuing entity, prepaid cards can be categorised into three types – open-loop cards, closed- loop cards, and semi-open loop cards. The open-loop cards are issued by banks and bear logos of Visa, Mastercard, or Rupay. These cards can be used at any bank approved outlets.

Closed-loop cards are those that are accepted only at specific locations and are usually issued by merchants for use at their outlets to purchase goods or service. Gift cards are an example of closed loop cards.

Semi-open loop cards are those that can be used at broader range of merchants. These cards are usually issued by retail chains or shopping malls that operate at various locations.

Also, based on if the card is reloadable or not, prepaid cards can be classified as re-loadable and non-reloadable cards. As the name suggests, re-loadable cards allow you to add money once the balance on the card is exhausted while in case of non-reloadable cards, you will not be able to add money once the amount on the card gets depleted.

Which banks Offer Prepaid Cards in India?

In India, prepaid cards are slowly gaining popularity and many banks these days offer prepaid cards to meet a variety of purposes. We have listed some of them below:

How can I get a Prepaid Card?

Applying for a prepaid card is easy, quick, and can be done either online on the official website of the issuers or by visiting their branch offices. Banks such as Axis Bank, HDFC Bank, and YES Bank will allow you to apply for prepaid cards online. However, for availing prepaid cards from banks such as SBI and ICICI Bank, you will need to visit their nearest branches.

Conclusion

From the above, we can conclude that prepaid cards offer a great alternative for cash payments and hence, many individuals and organisations these days prefer using it for gifting, rewarding employees, disbursing employees’ salaries, etc. The popularity of prepaid cards seems to be growing by the day but before applying for a prepaid card, ensure that you have read the terms and conditions carefully as there are a few risks and charges associated with it. Once you have done that, you can go ahead and enjoy a cashless and budgeted way of spending.