The Ins and Outs of Using Prepaid Cards for Your Small Business
While prepaid cards have become a viable way for people who have bad credit or have never used debit, prepaid cards can help small businesses in a number of ways. These cards are reloadable, containing fix amounts. Prepaid cards can help cover business expenses that include travel, supplies, and meals. They can help you and your employees stick to the budget and control work-related spending.
Advantages of Prepaid Cards
Other than the ability to control and regulate business expenses, prepaid cards are easy to acquire and load with money. These cards don’t need to be associated with a bank account and you don’t have to do a credit check. Approval is instant and prepaid cards are not reported to the three major credit bureaus, so you can’t borrow money but the card won’t affect your credit. Furthermore, prepaid cards easy to use. Just like debit and credit cards, they are accepted wherever the carrier is accepted and can be used to make online purchases as well as in-person.
Prepaid cards also help you keep personal and business expenses separate. Whether for the owner or employees, keeping these expenses separate is key to making sure you are using your work-related funds efficiently. This is also related to tracking your employees’ spending. By setting limits for their expenses, loading the card with a certain amount, and tracking what they are spending on, you will not have to worry that your business’s funds are being used improperly. The best part is that you can manage all of this spending remotely. Many prepaid card companies allow you to monitor transactions on your computer or from a mobile application.
Disadvantages of Prepaid Cards
Prepaid cards are great for small business, but they do come with some disadvantages. The key is to know what those are in order to avoid them. When you figure out what the disadvantages are, you can optimize your use of prepaid cards and get the most of them.
One thing that is a disadvantage if your business involves travel is that you will not be able to get reward points or benefits when you or your employees use a prepaid card. It can also be difficult if your funds are stolen. In the case of travel expenses, you need to weigh your options. Will the benefits of using a prepaid card outweigh the inhibition of no travel points?
The biggest disadvantage of prepaid cards is that sometimes they can come with multiple fees. A specialist from MoneyPug, a site commonly used to compare the best prepaid credit cards, shared that each card company is different, and will charge different fees. Some of these include monthly charges for the master account, monthly fees for additional cards, and cash withdrawal charges. Other than these basic charges, some prepaid card companies may charge you to make a foreign transaction, inquire for your balance, and stop payments.
Why Your Business Should Use Prepaid Cards
Despite the periodic pesky charges, most prepaid business cards are focused on small business owners. Keeping track of spending and avoiding credit interest can help you save money despite fees. The charges from prepaid cards are also cheaper than bank fees and other annoying charges. If you overdraft, the charges are much cheaper for prepaid cards.
Avoiding high interest rates is perhaps the most beneficial tool of prepaid cards. There are no credit fees because you are using the money you already have loaded onto the card. It is clear for you and your employees how much everyone has to spend on a particular supply, trip, or another expense. You can also avoid harming your credit.
By avoiding these expenses, the fees that prepaid cards come with are much more viable. The amount of money you save by keeping track of expenses and putting limits on what your business can spend on a particular thing, you will not only be saving money, you will be creating smarter habits in your company culture. Prepaid cards are a great way to begin the process of cutting unnecessary costs and making an effort to become the most efficient business possible. Knowing what the fees are and how they will affect you are the most important factors. Once you are aware of the charges associated with prepaid cards, you can calculate how much it will benefit you by avoiding credit interest and bank fees.