Reloadable Debit Cards and the Best Ways to Use Them

Prepaid cards are gaining popularity among U.S. consumers, whether they're being used as gifts or as an alternative to a bank account. Originally, they were targeted to people who were unable to obtain credit for one reason or another. However, the new generation of cards offer features that appeal to a wide range of people who want to control spending, manage budgets, and share money with family members.  

 

Sometimes referred to as general purpose reloadable cards - or GPR cards - reloadable debit cards can be used like any other debit or credit card to make purchases online or at brick-and-mortar locations. The difference is that the money you spend is not drawing on your checking/savings account or credit provided from a lender. It comes from money you have personally added to the card. You can load the card with funds from a checking account or add cash to the card at a bank branch. You can add money to your card over and over, making it an everyday payment tool. Apps associated with the card even provide controls like “lock and unlock” and alert services.

 

Nevada State Bank recently introduced a GPR card called OnCard. In addition to the card itself, OnCard® offers a mobile app and a website that acts as a command center for all card-related activity.

 

Reloadable cards like OnCard can be great for a variety of reasons and situations. Here’s a brief sampling:

 

Cards can be used with apps for money management

Mobile card apps can help you with money management. Similar to mobile banking apps, you can keep an eye on your balance, add funds, etc. You can even add multiple cards to your account, allowing you to share money with others who can spend the money by using their own individual cards.

 

To share money, you can add more cards to your account. You can add one secondary card, which has the same rights as the primary, and up to five additional cardholders. The primary and secondary can transfer money to any of the additional OnCards. The primary can also receive money from any of the additional OnCards. This capability is great for managing allowance, providing college students controlled access to money, or delegating expense purchases.

 

Good for teens or others you're supporting

Because of such features, reloadable cards can be great for families. If you have a teenager learning about financial independence, or if you're supporting elderly loved ones, for example, you can use the multiple-cards feature to distribute funds to these family members so they can use cards on their own.

The app also offers the ability to set aside funds for later use. This allows you to plan for future expenses by reserving money in a separate, visible space within your card account.

 

Prepaid, reloadable debit cards can be used for budgeting

Because you control how much money is on a reloadable card, these cards can be great for budgeting. You can add a set amount and limit your spending to the amount you chose, keeping your other funds in a checking or savings account. The associated mobile app will also help you manage your budget.

 

To budget, simply use your card for all your everyday purchases. After 30 days, the app will establish a starting budget for you based on what you’ve spent for the first 30 days. You can then plan the budget you want by adjusting budget categories and amounts. The app will help you track where you’re within budget and where you're over budget. Trend reports are created to give you visibility month-to-month so you can continue to fine-tune and adjust your budget as desired.

 

No overdraft fees

Another benefit of using reloadable prepaid cards is that you don't have to worry about any overdraft fees the way you would if you were using a standard debit card attached to your bank account. If you try to use a prepaid card for a transaction that is larger than the funds you have available, the card will simply be declined. If you do the same with a debit card tied to your bank account, the transaction may go through, but your account will be overdrawn, and your bank may charge you fees as a result.

 

ATM use

Reloadable cards typically let you withdraw cash using ATMs, though you won't be able to load money onto the card using one. There will usually be a daily limit for cash withdrawn from an ATM.

 

Cash back

You can also use the card for getting cash back during transactions at merchants that allow for this. This will also have a maximum amount per transaction and per day.

 

The card won't impact your credit

Reloadable cards will not have an effect on your credit history or rating, the way using a credit card will. In fact, no credit check is even required to gain a card in the first place. The card can still be used as a credit card during transactions. This is just the way it is processed by the merchant and will require a signature rather than a PIN.

 

Help reduce your fraud risk

If an ordinary debit card is stolen or compromised, the entire amount in the related bank account may be compromised. But with a reloadable card, only the amount loaded on the card is at risk.

 

You can use direct deposit

Direct deposit can be a convenient way to receive your paychecks, and you can use a reloadable card with that. You would need to set this up on the website associated with the card.

 

To recap, a reloadable card can be a great option for you if you want to be strict about your budget, and if you want to share money with other family members through their own cards, while also not impacting your credit history/score. You can avoid overdraft fees and utilize the convenience of ATMs, cash back when making purchases, and direct deposit functionality.

 

The United States Consumer Financial Protection Bureau has general information about prepaid and reloadable cards.¹

 

For more information about OnCard from Nevada State Bank, please visit www.nsbank.com/it-matters/oncard/ .

 

 

1. https://cfpb.gov/prepaid

 

The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice. Any views expressed in this article may not necessarily be those of Nevada State Bank, a division of Zions Bancorporation, N.A. Member FDIC