At the very basic, a Cash Card is one that is pre-loaded with cash to make payments of all types. It can also be used to make cash withdrawals at the ATM. Examples include prepaid debit cards, bank debit cards, payroll cards, and gift cards. In this category, credit cards don’t feature anywhere, since using them is a form of borrowing.
Cash Card Explained Further
With a cash card, you have a very convenient way to pay for products and services electronically. If you have a standard cash card, you can use it at virtually any merchant where it is accepted. Yet you may also have an alternate cash card, which could be limited when it comes to its use for payment.
So what are the distinguishing features between a standard cash card and the alternative ones? We discuss these further below:
Standard Cash Cards
1). Banking debit cards
If you have a standard cash card, it is most likely to be a banking debit card. The card will be linked to your check account at the bank. You can use it to pay for products and services electronically. The cash will be automatically deducted from the amount of money you have in your bank account. Using this card to withdraw cash from an ATM is very simple since the bank provides them.
2). Gift cards
This type of cash card is often pre-loaded to allow the holder to make electronic payments easily. If issued by a particular retailer, you may use your cash card at only the specific store. Those issued by third parties are general. To make it easier for you to make payments, there are a number of gift card providers who provide some that have similarities with debit cards. An example is American Express. If you hold a cash card from them, you can use it to make payments anywhere they accept American Express. Some gift cards do not allow for pre-loading, which means that purchases can only be made until the limit is reached.
Alternative Cash Cards
Apart from the standard cash cards, others come with different terms and conditions, depending on the issuer. Since they are prepaid, these cards are ideal for individuals without bank accounts. The import of that is that even without a bank account, just about anyone can have a cash card. The Square Cash Card is an excellent example of an alternative prepaid card. You may also have a payroll card provided by your employer but through a working arrangement with a card issuer.
What Is A Cash Card Used For?
Did you know that a cash card can help you to get greater control over your spending? After all, you cannot spend more than the cash loaded into the card. It, therefore, becomes more manageable when it comes to managing your budget. If you have a big family and you want to control your children’s spending, you can give a cash card to each one of them. While the cash card will ensure your kids have money to spend, it will put a limit on how much cash they can use within a given period of time.
A cash card is one of the easiest ways to make daily purchases. You can use them to make cash payments on the spot quickly. There is no need to carry the bills home.
How to Make Payments Using a Cash Card?
You can only make payment using a cash card if it is pre-loaded or there is cash in the bank account. If it has a magnetic stripe, you will swipe it through the card reader. For a Chip and PIN cash card, you will insert it into the card reader and enter your PIN to make payment.
The amount you are paying will be deducted from the card balance or bank account. If it is a bank debit card, the amount will be deducted from the bank balance. You can use a cash card virtually anywhere it is accepted. You can also use it to withdraw cash from an ATM and use the money for payment, especially if the merchant doesn’t accept the card.
You don’t always have to make your payments using a credit card. To get more control over your budget, a cash card is recommended.
