Prepaid cards are payments tools that allow you to recharge and use the money for various transactions. They work like debit cards, even though they do not necessarily link to bank accounts. You can buy goods and services, send money to others, and withdraw at ATMs. Later on, you will learn how to transfer money from prepaid card to bank account.
Some issuers do not just give you a prepaid card to spend money but also save money for your plans. For example, Netspend, one of the biggest prepaid card companies, allows you to save excess money for your future. And by the way, some prepaid card companies collaborate with some banks to issue prepaid cards. Therefore, the money is very safe.
You can get a prepaid card online using various things as per the federal government requirements. You require a smartphone, a tablet, or a computer and a secure internet connection to get started. Opening a prepaid account does not require credit history so that anyone can apply for a card with the proper documentation. Of course, underage can get the cards to use when they apply under their parents or guardians.
What are the requirements to open a prepaid card account?
Since a prepaid card issuer is a financial company, you must follow the United States requirements for opening an account. Therefore, you must produce the following during the account opening.
- Social Security Number
- A US phone number
- Email address
- Current physical address
- An identification document
In the application process, you will also provide your full names, city, state, and ZIPcode. Apart from providing your identification and the Social Security Numbers, you must also upload the documents for verification.
How to get a prepaid card?
You must apply online or at a physical branch to get a prepaid card. However, most issuing companies operate online, and thus you must visit their website and start the application process.
Once you open the issuer’s website, you should navigate to the open an account section and enter all the required details step by step until you hit the submit button. The card issuer then processes your request and gives you feedback in your email or phone number. You then receive it at your physical address and activate as per the guidelines. Some prepaid card companies require you to visit specific locations to activate your card then top up to start using it.
Most issuers allow you to recharge using external sources such as bank accounts and debit cards. You can thus transfer money from a credit card to a prepaid card online.
How to add money to a prepaid card?
There are various ways you can add money to a prepaid card. They include the following.
i) Deposit a check
Prepaid card companies allow you to deposit checks on your online accounts using banking apps. You only need to sign the back of your check, log into your account, take pictures of both the front and back of your check, and then upload for processing.
Online check deposit eliminates the need to walk to a bank to deposit a check. It takes a few days to process a check, and funds reflect on your account as soon as the check goes through.
ii) Deposit from a bank
It is interesting to note that prepaid cards allow you to recharge your account using a bank account. That means you do not need to walk to a reload center to put money in your card account. You only need to add the bank’s details to your card account, and there you go. You have to transfer money using the bank account’s routing number and account number; thus, these are the details you should add to your account.
iii) Direct deposits
Prepaid cards allow you to receive direct deposits from the government and any other relevant source. Direct deposits allow you to receive funds two days earlier than ordinary banks’ standard time. For example, during this period of Covid’19, most beneficiaries of the unemployment benefits receive their money in their prepaid cards via direct deposit.
iv) Add money at a location
Prepaid card companies allow you to reload your card at specific locations. Walmart is among the familiar places you can reload money to your card. You only need to visit the location with your card plus the cash and present them to a cashier, who then carries on the process.
v) Receive money from other users
Prepaid card companies allow you to transfer money from one card to another online. In most cases, you require the phone number or the email address of the recipient to be able to send them money. If someone sends you money to your account, the funds will be available for use as soon as they send them.
How to transfer money from a prepaid card to a bank account
Before I show you the process of transferring money to a bank account, it is essential to note that not all issuers allow you to transfer funds to a bank account. For example, Netspend does not allow you to transfer funds to a bank account. The following are ways to transfer money from your card to a bank account.
1) Wire transfer
Using wire transfer, you can quickly transfer funds from your online account to your bank account. Wire transfers require you to have the account and routing number of the receiving bank account. The transfers are faster since the financial companies handle the processing.
2) ACH transfers
ACH means Automatic Clearing House. You can transfer money via the ACH method, which passes through the ACH before landing in the receiving bank account. Unlike wire transfers where funds reflect within 24 hours, ACH transfers take 1-3 days to complete.
3) Use money transfer agents
Various money transfer companies allow you to send money to a bank account. They include MoneyGram, Western Union, Wise, and Remitly. You need to have an online account with these agents, then use your prepaid card as a funding source when transfering money to a bank account. You also transfer money from a Credit Card to a Bank Account using the agents.
How are prepaid cards different from debit cards?
Most people confuse debit cards with prepaid ones because they look alike. However, there are differences between the two. Even though both allow you to spend what is in your account, they differ in the following ways.
- Prepaid cards do not necessarily link to bank accounts, while debit cards are linked to checking accounts and sometimes to savings accounts.
- Prepaid cards require you to top up your account to start using them, while debit cards allow you to use what is in your bank account.
Is it safe to use prepaid cards?
It is always a concern when opening an account to deposit money. You might be wondering whether it is safe at all to open a prepaid card account. A prepaid card account is safe to use since the cards have Personal Identification Numbers (PINs) that you can use to safeguard your funds. Furthermore, they have adequate online security whereby your data online is encrypted to prevent third parties from accessing any pieces of information.
Additionally, online card accounts require you to create a password and enable Touch ID and Face Unlock features for maximum security. Above all, most prepaid card companies associate with certain banks to issue debit cards. Since banks have FIDC insurance, your funds remain safe even if the company collapses. FIDC insures up to $250,000 per single account.
Can you use a debit card online?
Most issuers allow you to open a debit card account online using their unique apps. Here, you can manage your money conveniently. You can send money online using a debit card to another card or a bank account. You can also buy goods and services online using a debit card.
Moreover, debit cards allow you to view your transaction history. You can see when you sent money to someone when you paid for a particular commodity online, and so on.
What are some of the prepaid cards I can use?
Various prepaid card companies issue debit cards across the company. They include the following.
a) Bluebird by American Express
The card has no monthly fees whatsoever. It allows one to withdraw money from ATMs for free and gives you great features to manage money.
b) Movo Virtual Prepaid Visa Card
Movo Virtual Prepaid Visa Card does not charge you monthly fees and allows you to make instant transfers between cards.
Netspend prepaid cards are some of the great cards you can use for your day-to-day transaction activities.
You can create multiple subaccounts for kids, and the card requires you to pay $2.50-$5.99 per month.
e) Walmart MoneyCard
The card is best for giving you rewards and saving money.
A prepaid card helps you to top up money for your transactions. You can buy goods and services and how to transfer money from prepaid card to bank account. Prepaid cards do not necessarily link to bank accounts, and that is one way they differ from debit cards. You can get a prepaid card online or at a physical location. Prepaid cards include Walmart MoneyCard, FamZoo, Netspend, and Bluebird by American Express.