Online spending has been growing since the government implemented the lockout due to the covid-19 pandemic. But if you are among those who have been spending on credit card and boarding, you can adopt a simple strategy to prevent excessive spending – use prepaid instruments.
You can either go for the traditional prepaid cards or mobile wallets. Usage limits your spending based on your budget and protects you from some cyber.
PREPAID FRIEND
Prepaid cards are not linked to any bank account. All you have to do is load the card with the required amount, and you can start using it offline (at the point of sale) and online. Some cards allow you to withdraw money at the ATM.
Before more options were available in the payment area, many financial planners recommended prepaid cards as a tool to control spending behavior and stick to the budget. They are still relevant if you want an instrument that can be used online and at merchant stores.
They can be useful if you are concerned about the safety and security of your cards. Even if you suffer, it will be to the extent of the money loaded in prepaid cards. For credit cards or bank accounts, the loss can be much higher.
If you have an online banking facility, some banks allow you to get a prepaid card online. If you want a prepaid card from another bank where you are not a customer, you need to offer KYC (know your customer) documents – proof of your address and identity. Once the card is issued, there is an option to replenish online.
Banks usually charge a fee ₹50-100 to take out a prepaid card. Some may even charge loading fees. Watch out for such expenses. Also, load money based on your budget as a balance on a prepaid card will not earn any interest. They have a special legitimacy. You must withdraw the money before the effect expires.
They can be a useful tool to give to your children for their expenses. You can track the costs. Prepaid cards are also useful for giving someone cash.
WALLETS
Wallets serve the same purpose and have similar benefits. But they are more useful for online transactions. They are not as widely accepted at merchant stores as prepaid cards.
However, the amount you can use on wallets depends on the KYC. Completion of wallets is verified by a mobile phone number and government-issued identity cards ₹10,000 per month.
Users who have completed a full KYC can ₹1 lakh per month.