I’ll be the first to admit that I don’t always stick to my own personal budget. Although I tend toward frugality, there are times when I splurge, such as when I treat myself to a nice lunch or attend a live sporting event. There are some months when these vices hinder my ability to attain my financial goals.
The bright side is that I know I’m not alone in this difficult situation. Many people struggle to keep to their monthly spending budgets for a variety of different reasons. However, suppose there was another approach.
Reloadable Prepaid Cards and Budgeting
You won’t believe that there is another option. Many consumers, like yourself, find it simpler to exercise self-discipline and keep track of their spending while using a prepaid debit card that can be reloaded with additional funds.
In contrast to credit cards, prepaid cards do not incur interest. Also, unlike regular debit cards, which can access your entire bank account balance, they can only be used for specific purchases.
Prepaid cards are debit cards that have no initial value and require a monetary deposit before they can be used for payments. In the same way as a gift card, once the card’s balance reaches zero, it can’t be used again until further funds are added.
That’s right, there’s an automatic limit on how much you can spend with any prepaid card. That way, you may load the card with the exact amount you need to pay your regular expenses for a set time period often a week or a month without having to worry about going over your budget.
This means that a prepaid card is a great option for covering the kinds of routine monthly costs you incur, such as food, clothing, transportation, and recreation. Your prepaid card can be used at any establishment that accepts Visa as a payment option, in other words, a Visa-branded prepaid card is good anywhere you see a Visa logo at the register or online checkout page.
As a result, it can serve as an alternative to a standard bank account or credit card for some people. In addition, many cards offer online, mobile-friendly account dashboards that are analogous to bank account dashboards, allowing you to do fundamental operations like money transfers and balance checks.
The money on your prepaid card, however, won’t grow in value as it would in a savings account because no interest is paid on these types of accounts. It is not recommended to utilize a prepaid card to save money except for short-term needs like travel and seasonal purchases.
Other vehicles, including regular savings accounts and individual retirement accounts (IRAs), are better suited for emergency cash, education savings, and retirement savings.
Reloadable prepaid cards are a great way to keep track of your monthly spending, and I finally made the leap and tried them out. I researched the benefits and drawbacks of prepaid cards, took a close look at my regular bills and purchases, and ultimately decided to sign up for the Green Dot® Reloadable Prepaid Visa® Card through Visa Clear Prepaid.
After a few days of research and preparation, I set up and successfully completed a 30-day budgeting challenge in which I paid for all of my regular household costs with a Green Dot® Reloadable Prepaid Visa® Card.
Here is what I discovered about myself and the world of personal finance before, during, and after my own financial trip.
How to Use Prepaid Cards
Options and Prices for Reloading and Loading Your Card
Money must be added to the card when it is first received. It can be done in a number of different ways. Regardless of the method used to load funds for the first time, some issuers, such as Green Dot and others in the Visa Clear Prepaid program, will not charge a fee.
Fees may be assessed for additional loading (also known as reloads). Each card issuer, card type, and loading mechanism has its own unique requirements.
Methods and costs associated with loading and reloading include:
- Bank Deposit or Direct Deposit. The most cost-effective approach is often direct deposit from employment or other revenue sources like a university or government agency. It’s important to note that many cards (including those within the Visa Clear Prepaid program) allow you to deposit all or a portion of your paycheck directly onto your card, giving you complete discretion over how much money you receive and, by extension, how much money you have available to spend each pay period.
- Your Deposit Will Be Held In-Store. Reload @ the Cashier allows you to quickly top off your card with cash at a register and get on your way. The standard price is $4.95 per load.
- Walmart MoneyGram/Check Deposit. If your paycheck or government benefit check is pre-printed, you can load the funds onto your Walmart prepaid card at any of their service counters. Find out if your neighborhood Walmart or other retailer accepts your card online or at the store. There are costs associated with cashing a cheque at Walmart.
- Funds Can Be Transferred Online From Another Prepaid Card. Green Dot is one of the prepaid card companies that lets you move money between cards in your account. This is convenient if you have more than one reloadable prepaid card or if you wish to send or receive money from someone who has the same type of card. Typically, there is no fee associated with making such a transfer. (With Green Dot cards, they’re always free.) However, there are additional costs associated with having a supplementary card, including purchase and monthly maintenance fees.
Money Moved From Bank to Bank. If you have an online payment account and know your account number or debit card number, you can make a direct transfer from that account. Using this method will cause a delay of one business day to three.
Additional Significant Card Fees
Prepaid cards have additional costs beyond the load and reload transaction fees. Many of these features are standard on debit cards and regular checking accounts. To keep your spending within your budget and avoid incurring unnecessary costs, choose a prepaid card that clearly states when charges will apply.
My own Green Dot Reloadable Prepaid Visa Card is a part of the Visa Clear Prepaid program, and as such, its charge schedule is completely transparent.
- Card Cost to Buy. Depending on the card issuer and the store, the purchase fee could be anywhere from $2 to $5. There is typically no added cost for making a transaction online. In-store transactions with Green Dot incur costs between $2.95 and $4.95, but purchases made on their website incur no fees.
- Payment Required for Monthly Upkeep. Almost all prepaid cards have a monthly maintenance fee, analogous to what certain banks charge for checking and savings accounts. A normal charge is from $5 to $6. The fee for reloading my Green Dot® Prepaid Visa® Card is $5.95.
- Withdrawals Made Outside of Their Network at Tellers or ATMs. Cash withdrawal fees are not charged to cardholders of many prepaid cards, including those that are part of the Visa Clear Prepaid program. However, card issuers often charge for out-of-network withdrawals, just like banks do. Typically, you should expect to pay between $2 and $3 for these costs. The price for a Green Dot is $2.50. Using a prepaid card to withdraw cash from a bank branch may incur additional fees. Green Dot’s fee for this service is also $2.50.
- Value Verifications. Some ATMs may charge a fee if you want to check your card’s balance. Green Dot, for one, charges fifty cents for each balance inquiry. This cost can be avoided by checking your account status via a mobile device, which is always free of charge.
- To Replace a Misplaced Card. When a card is lost or stolen, most issuers will ask for a replacement fee. Typically, you should expect to pay between $4 and $10 for these types of charges. Green Dot costs $4.95.
- Deals With Foreign Parties. Prepaid card companies, similar to credit card companies, commonly tack on an extra fee for international purchases. This fee is often a small proportion (2% to 4%) of the purchase price. The fee for making an international transaction with Green Dot is 3% of the total amount.
It’s worth noting that some prepaid cards provide reduced or even waived costs if you satisfy certain criteria, such as maintaining a certain monthly transaction volume, maintaining a specific minimum amount, etc. If, for instance, I use my Green Dot® Reloadable Prepaid Visa® Card at least 30 times each month and keep a $1,000 balance, the monthly maintenance cost is eliminated.
How to Get Your Card and Load It
You can get a prepaid card that you can load money onto in a matter of minutes.
You can accomplish this in one of two ways:
You may apply for a card online with most companies. My application for a Green Dot® Reloadable Prepaid Visa® Card took all of five minutes and was completed online. To apply for a card online, simply visit the issuer’s website.
Your name, address, phone number, and Social Security number are only some of the required pieces of basic personal data. You’ll need to set up a username, password, and security questions to access your account.
Your permanent card will arrive in the mail within one to two weeks of signing up, but in the meanwhile, you’ll have access to a temporary card number in the meantime. You can print a direct deposit form to send to your employer or make a deposit from an external account or card before you leave the sign-up wizard.
While you can use your temporary number to make purchases both online and in-store, the cashier will need to manually punch in the number whenever you make a purchase in-store. This is the main drawback of signing up online rather than in person. The absence of a membership fee is the main benefit.
Visa Clear Prepaid cards can be purchased at a wide variety of national retailers, including 7-Eleven, Walmart, Kmart, Rite Aid, CVS, Walgreens, Family Dollar, and Dollar General. To activate your card, bring the whole amount in cash and tell the cashier to load it onto your card before deducting any applicable fees.
You will then receive a temporary card; the permanent card will arrive in the mail within a week to ten days. Note that the balance on your temporary card will be transferred to your permanent card upon arrival, and this applies to both online and in-store purchases.
To put your mind at ease, you need not worry about depleting your temporary card before your permanent one arrives in the mail.
How to Use Your Card and Activate It
In order to make purchases with either your temporary or permanent card, you must first register and activate it. Simply navigate to your card company’s online portal and follow the on-screen instructions.
Click “Register/Activate” and then choose whether you purchased your Green Dot® Reloadable Prepaid Visa® Card online or in-store. Don’t forget to fill in your name, address, and card number. If you haven’t done so before, you might be asked to enter a PIN and answer some security questions.
Whether it’s a temporary or permanent card, you can start using it immediately at any store that takes Visa cards, such as restaurants, gas stations, and grocery stores, and withdraw cash from ATMs or bank branches.
How to Budget Every Day using Prepaid Cards
1. Use Direct Deposit for Easier and Cheaper Loading by Using Direct Deposit
Many prepaid cards provide you with flexible methods of adding funds. For instance, the Green Dot® Reloadable Prepaid Visa® Card can be reloaded in a number of different ways.
These include receiving direct deposits from employers or other income sources, making cash deposits at participating merchants, transferring funds from a bank account, and transferring funds from another prepaid card.
Instead of paying up to $6 for every load with some alternative reloading options, you may load your card for free with direct deposit. Direct deposit is frequently the most cost-efficient option when it comes to reloading prepaid cards.
Because it doesn’t require any additional time or effort on your part—like visiting a bank or setting up an electronic funds transfer—it’s the most convenient choice. It’s helpful if you’re a busy individual who doesn’t have to add yet another engagement to your schedule.
2. Select a Card from a Vast Network of ATMs
Getting cash from an ATM is a feature offered by the majority of reloadable prepaid debit cards. Though many ATMs don’t charge withdrawal fees, not all are part of widespread fee-free ATM networks.
Consider joining an ATM network seriously if you need cash frequently or even occasionally. I saved a ton of money by switching to the Green Dot® Reloadable Prepaid Visa® Card since I now have access to more than 20,000 MoneyPass ATMs worldwide without incurring any fees.
Some of the other Visa Clear Prepaid cards also have extensive networks. For instance, the PNC SmartAccess® Prepaid Visa® Card can be used at any of the more than 7,300 PNC-branded ATMs across the country without incurring any fees.
3. Spend Your Money on the Most Important Things First
If you don’t have a firm grasp on your regular costs, using prepaid cards to exercise fiscal restraint may prove difficult. The easiest approach to ensure you do this, despite the ebb and flow of various spending, is to start with the most crucial parts of your budget and work your way outward.
An expense budget can be created with the help of Mint or another online budgeting tool, Excel or another simple computer application, or simply good old-fashioned pen and paper.
Expenses such as individual bills can be tracked easily by creating a category for each of the following and placing the related line items within the correct one:
- Regular Expenses. The first step is to establish a savings plan that allows you to pay your fixed and variable monthly expenses like rent or mortgage, cable, Internet, electricity, gas, water, childcare, etc. Since you already have an idea of how much money you’ll need for each of these, you can plan accordingly with some wiggle room for variable expenses, such as electricity and gas.
- Money Spent Purchasing. Determine a monthly budget for shopping. Separate required and optional spending on purchases. The former group consists of goods like food, clothing, tools, and means of transportation, whereas the latter group consists of necessities like electronics and tools. The latter group incorporates items like leisure activities, consumer electronics, and membership fees that are not required for professional development such as gym memberships. Even if you have some wiggle room in your budget for luxury items, prioritize the necessities.
- Separate Budgetary Subheadings. Finally, don’t forget to include any extra-special budgetary considerations, like forthcoming travel plans or holiday gifts. If you don’t have any concrete savings objectives right now, that’s fine. Simply said, you will have more discretionary funds at the end of the month.
Once you know how much money you’ll need each month to cover your bills, you may set up direct deposit to your reloadable card for that amount plus a little extra. Put the rest in a savings account or somewhere else. If you find that this amount of money is insufficient to cover your regular bills, or if you end up with a surplus at the end of the term, you can change the amount you put away each paycheck.
4. Manage Your Children’s Finances
Parents can get twice as much use out of prepaid cards. To begin, they are ideal for storing weekly or monthly allowances, and for older children, the same holds true for college dorm rooms and board.
You can add the funds for each child’s card at the register of a participating retailer during your shopping trip, or you can transfer the funds from your own prepaid card.
In a similar vein, prepaid cards can be a great tool for learning. The first time you give your child a prepaid card, it’s important to explain how it works and how much money will be loaded onto it each week or month.
Give them a pat on the back if they’ve been thrifty and managed to finish the billing cycle with unused card funds. What a great way to introduce the benefits of saving and the significance of money!
5. Budget and Save for Special Expenses
Prepaid cards that can be topped off with more funds are popular among those who are putting money aside for a one-time event like a trip, the holidays, or a major home renovation.
Direct deposit (a free load option with Visa Clear Prepaid) from your work or another cash source can be set up, making it easy to track how much money is coming in each month.
The next step is to define the purpose of your savings, the amount you intend to set aside, and the duration of your efforts. Next, calculate how much of a monthly savings contribution you’ll need to make toward this objective, and put that money aside before you make the rest of your monthly budget.
Finally, and this is very important, move the savings to a new prepaid card. Make this payment a regular recurring one until you’ve reached your target.
Keep in mind that one’s retirement, education, and emergency savings are not the same as one’s special expenses. No matter how urgent the need may seem, it is never a smart idea to tap into emergency reserves for a non-emergency purpose.