To use a prepaid MasterCard, like most prepaid credit cards, you simply load a set amount of money onto the card and use it to make purchases just like you would with an ordinary debit or credit card. You never get into debt with it (there are no overdraft facilities or loans and no credit is given by the card company): the money on the card is yours and once you’ve spent it there will be no more funds available.
They’re designed to help you to budget because with standard debit or credit cards it can be very easy to lose track of how much you’ve spent. It can also be tempting with a debit or credit card to spend more than you have or can afford because the cards can still be used and you tend to tell yourself that you’ll be able to make up for overspending later.
Another benefit to owning a prepaid MasterCard is that it is safe to use online and safe to use in shops thanks to its chip and pin system. It’s what makes the difference between using a prepaid MasterCard and just carrying around a bundle of cash. It’s also a lot safer than cash because if your prepaid MasterCard were to be lost or stolen, you can be issued with a replacement card with the correct balance if you put a stop on the card – that wouldn’t happen if someone stole your cash.
You can also have your wages or salary paid onto the card (very handy if you don’t own a bank account) and you can use it to pay your utility bills. With a brand name like MasterCard behind you, you won’t be short of places that will accept a prepaid MasterCard since all shops and services that accept MasterCard will also accept a prepaid MasterCard.
You don’t need a credit check before you can apply to get a prepaid MasterCard since no actual credit is involved, so even if you have a poor credit history you’ll be able to get one of these cards. That makes sense, really, since the people who need to improve their budgeting skills are usually the people with poor credit history and what better way to learn than through a prepaid card? As long as you can prove who you are and where you live you shouldn’t have any problems being accepted.
You can also use a prepaid MasterCard to transfer money abroad – you load the money onto the card and they use their card to access it. That’s much cheaper than using traditional methods of transferring money overseas. Similarly, you can give your grown-up child a prepaid MasterCard to help them to manage their funds when they’re at university. Often, leaving home for the first time is the first chance a child has to experiment with managing their own money but normally they do this by opening a student bank account – with a potentially crippling overdraft facility. A prepaid MasterCard is a risk-free way of learning this valuable life skill.
Finally, a prepaid MasterCard can help you to improve your credit rating if you select the appropriate card type (called a ‘Credit Booster’). This works by MasterCard charging you a small monthly fee and assuming you pay that fee then after 12 months you will be classed as having settled a debt and therefore having honoured a credit arrangement.
To make a payment onto a prepaid MasterCard all you have to do is call in at your local Post Office with your card or at a local Paypoint (which is also where you might pay for your utilities) or if you have a bank account you can make an electronic BACS transfer.