Prepaid banking cards have been around for decades, but until recently it was necessary for them to be connected to a bank. With the advent of newer prepaid cards, however, there are now a lot more options for people who are interested in becoming unbanked.
Why Become Unbanked?
Disassociating your finances from a bank (also known as going off the financial grid) is the only way to prevent financial institutions and government agencies from tracking your money. There might be several reasons for wanting to do this. Many business owners have legitimate reasons for not wanting a record of the income they make. Other individuals may need to hide money from an abusive spouse or other individuals who are trying to financially abuse them. Becoming unbanked is one tool that can allow a person in this situation to accumulate the money they need to escape without relying on a bank.
How to get prepaid cards?
Prepaid cards used to only be sold by banks as a way to access funds outside of a standard bank account. The cards were only available to people who had an account with the bank. Today, however, there are a number of credit card companies that offer prepaid cards for sale. Furthermore, nearly every major retailer offers prepaid gift cards that can be spent on just about anything.
General purpose vs. store cards
There are two types of prepaid cards. General purpose cards are usually sold by major financial institutions such as credit card companies. These cards typically work in two ways. Some can be purchased for a set amount of money and used until the money is gone. Others can be purchased for a nominal fee, then reloaded with money as needed.
Store branded cards, commonly known as gift cards, are also a type of prepaid card but they can only be used at the retailer specified on the front of the card. These cards do not tend to charge fees, but the restrictions on their use mean that they aren’t as versatile as general purpose cards.
How to buy a general purpose prepaid card?
General purpose prepaid cards are commonly found at big box retailers, drug stores, grocery stores, and even gas stations. The cards are sold in two different forms. Fixed amount cards can be purchased like any regular store gift card. They come in a variety of denominations, and when the funds on the card have been used up the card is usually thrown away. Purchase cards like these just like you would a gift card; they can be purchased through the store’s cashier.
Prepaid cards that allow you to reload a balance can be a bit trickier. For these cards, you’ll purchase an empty card from the retailer, usually for a nominal fee. The cards can then be taken to a cashier or customer service counter to be reloaded. Some of these cards will allow you to use a website to directly transfer funds from a bank account. Be aware, however, that if you choose to use this method the bank will have a record that funds were moved from the account to the card.
These cards can be reloaded with cash, but some major retailers will give you the option to transfer the money from a check directly onto the card. For example, just about any retailer that offers check cashing services will allow you to transfer the amount of the check (minus a fee) onto a prepaid card. There are even cards that allow you to transfer funds from cryptocurrency accounts, although most of these services require you to set up an account online.
None of these methods of getting money onto a prepaid card require you to use a Social Security number. If you are transferring cash onto the card, it is possible to do so without giving away any type of identifying information about yourself. Transferring a check or cryptocurrency will usually require the financial institution to get the same information from you that you would be required to provide if you were converting these assets into cash, however.
How to use prepaid cards?
Once you have loaded the prepaid card with money, it’s possible to use the card anywhere that accepts credit or debit cards. From the user’s point of view, the cards function just like a bank-issued debit card. They can be used in any store that accepts credit cards.
Paying bills with one of these cards is slightly trickier. In order to use the card, the utility company has to accept credit card payments. This is rarely an issue, but be aware that many government-controlled utility companies require credit card users to pay a fee.
Transferring funds to a person or company that does not have a credit card reader can be much more difficult. While there are cards that allow you to make transfers of money from the cards directly to a bank account or a different card, these transactions usually require the user to set up an online account. While these accounts usually don’t require a Social Security number, they can require a lot of other identifying information that you might not feel comfortable providing. Instead, consider purchasing a separate card in the denomination that you wish to give. For example, a person wishing to pay their rent with one of these cards might be able to arrange with their landlord to provide them with a preloaded card with the rent money available on the card.
Getting paid with prepaid cards
The main issue with using prepaid cards to stay off the grid is that most companies pay their workers via direct deposit. That usually requires workers to have a bank account. There are some solutions to this problem, however.
1. Request payment on a prepaid card. Large employers with a high number of hourly workers are making this option for pay checks more available. Ask your HR department if this is an option for you.
2. Use a check cashing service to buy a prepaid card. When you cash your paycheck, ask for a prepaid card instead of cash. In some cases, fees for this service are less than taking cash.
What to Be Aware Of
Using prepaid cards instead of a bank does come with its own risks. These are some of the most common issues that arise, and how to deal with them.
Everyone knows that banks and even credit unions charge fees for everything from opening an account to cashing a check. Prepaid cards will also charge fees. Expect to pay for the card itself and pay a transaction fee every time you put money on the card or spend the money on something. Federal law requires that the companies that issue these cards clearly post their fees, however, giving you the ability to comparison shop. Also look for deals and partnerships where fees are waived or reduced. For example, many big box retailers that issue these cards will waive deposit fees on the cards if a check is cashed in their store to provide funds for the card. It’s also possible to find cards that do not charge transaction or swipe fees at specified retailers.
Losing the Card
Once loaded with money, many of these cards are essentially gift cards. If the card is lost or stolen, the money is gone. To protect yourself, consider taking these steps.
1. Register the card. Some prepaid cards give you the option to register them with an online account. In the event that you lose the card, the company can simply cancel the card, then transfer your balance to a new one that you purchase. Creating this account does open the door to the type of tracking that you may be looking to avoid, however.
2. Spread out your money over several cards. This gives you the ability to hide cards around your home, and only have a small amount of money on you at any given time. If a single card goes missing, the consequences will not be as dire as if you lost all of your money.
Prepaid debit cards are fairly easy to find and set up without a Social Security number. In today’s society, it’s fairly easy to find plenty of places that accept the cards, making it more possible than ever to live your life unbanked.