What Is a Prepaid Mastercard? [A Simplified Guide]
What Is a Prepaid Mastercard, and How Do You Use It?
You may have noticed a bunch of prepaid Mastercards displayed by the checkout lanes in supermarkets, right beside the gift card racks. If the first question that pops in your head is “What is a prepaid Mastercard?”—you’re in the right place!
Before using a prepaid Mastercard, it’s essential that you learn about its core features and usage terms. This easy-to-follow manual will help you understand the complete nitty-gritty of this card.
We’ll also introduce you to Mode Mobile’s products that can help you earn free prepaid Mastercards and gift cards by doing fun activities on your phone!
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Is a Prepaid Mastercard a Credit Card or a Debit Card?
Prepaid Mastercards are stored-value payment cards sold by various retailers across the U.S. You can buy them directly from stores for cash, without the hassle of providing identification documents or verifying your signature. You basically get a ready-to-spend card without getting the banks involved.
It’s normal to confuse prepaid Mastercards with debit and credit cards. They look the same, and physical or online payment portals don’t distinguish between them, but that’s where the similarities end. A prepaid card is more like a wallet—you preload it with cash and cannot spend more than the value it holds. Debit and credit cards usually let you spend more than you have because of overdraft or credit extension options.
The table below will help you map out the primary differences between these financial instruments:
Not linked to a source of funds as you load the card with cash
Linked to a bank account
Linked to a line of credit or a bank account
Identification check is necessary
Credit standing is reviewed for approval
No interest is charged as the card is preloaded with money
Interest is charged only on overdrafts
Interest is charged if you don’t pay the billed amount in full
Pay now, buy later
Buy now, pay later
Buy now, pay later
While these technical differences are not hard to work out, people mostly struggle to choose the right option.
What Can I Use a Prepaid Mastercard For?
A prepaid Mastercard is an ideal choice when you are on a budget or don’t trust yourself with a credit card. Its limited-balance structure helps you control your spending and avoid piling up debt. Besides budgeting, you can consider using a prepaid card when you:
- Want an alternative to cash—If you are not too keen on carrying a wad of dollar bills around, transferring your spending cash to a prepaid card is a viable solution
- Have no access to a bank account—According to a source from 2019, about 25% of households in the U.S. are unbanked or underbanked due to the lack of sufficient credit or income, so prepaid cards can be perfect spending tools for them
- Need an extra layer of security for online shopping—Unlike traditional cards, prepaid Mastercards don’t carry excessive info about your identity. You can choose them if you’re not okay with sharing your credit or debit card details online
- Teach financial hygiene to kids—Many parents let their kids learn about managing finances through a low-risk prepaid card before letting them move on to debit or credit cards
- Collect tax refunds—Prepaid cards like the Emerald Prepaid Mastercard help you get tax refunds in an effortless manner
Source: Adeniji Abdullahi A
When To Avoid Using Prepaid Mastercards
Prepaid Mastercards won’t be suitable for you if you want to:
- Save your money—If you are looking to save your money, storing your cash on prepaid cards isn’t viable. These cards have a complicated fee structure, and you may lose a considerable portion of your savings in charges like:
- Purchase and activation fee
- Transaction fee
- Inactivity fee
- Reload fee
- Monthly fee
- ATM withdrawal fee
- Balance inquiry fee
- Improve your credit score—Prepaid cards are credit-neutral and won’t help you build credit standing as credit cards do
- Enjoy fund protection—Since there’s no bank or financial institution backing the money on a prepaid card, you don’t get much protection or recovery support in case of stolen funds
To sum it up, prepaid cards are good for safe spending but not recommended if you wish to store the money.
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Source: Google Play
How Does a Prepaid Mastercard Work?
From an operational point of view, think of prepaid cards as similar to Visa or Mastercard gift cards. You can strictly spend within the amount loaded on the card—the only difference is that prepaid cards are reloadable.
Once you exhaust the balance on a prepaid Mastercard, you can take it back to the retailer and ask a cashier to top it up with cash. The reload fee can be between $3 and $5, depending on the individual terms and conditions of using the card. You can also add funds by:
- Sending money from your bank to your prepaid card
- Transferring money from one prepaid card to another
- Depositing a check to the card through selected ATMs
- Asking your employer to send your paycheck to your prepaid card
Prepaid Mastercards have an expiry date, usually printed on the front of the card. If your card expires and there’s no money left on it, you can destroy and discard the instrument. In case there’s some balance on the card, reach out to Mastercard Consumer Support Services to get a new card issued for the balance.
How To Use a Prepaid Mastercard—Top Questions Answered
Consult the following Q&A table to clarify some common operational queries related to prepaid Mastercards:
Where can I buy a prepaid Mastercard?
You can purchase a prepaid card from:
Where can I use my prepaid Mastercard?
Prepaid Mastercards are open-loop cards and can be used anywhere in the U.S. where Visa or Mastercards are accepted. Certain cards, like prepaid Mastercard plastic and digital gift cards, also allow international usage. These gift cards have personalized designs and can be used both online and at stores
How can I pay with a prepaid Mastercard?
You can pay with a prepaid Mastercard:
What is the card number on a prepaid Mastercard?
The card number on a prepaid Mastercard is the numeric sequence (usually 16 digits) on the front of the card. The expiry date is also often printed on the front, while the PIN is on the back strip
Can you take money out of a prepaid Mastercard?
If you have technical queries, dial the customer service number printed on your card.
Source: Andrea Piacquadio
Why Buy Prepaid Mastercards When You Can Get Them for Free
Prepaid Mastercards and gift cards are one of the best spending tools in the market right now. They are more convenient than carrying cash and can be easily used for bill payments and online shopping.
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Source: yang miao
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Source: Mode Mobile
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Featured image source: AltumCode