When you have recurring bill payments, using a prepaid card is one of the many options you have at your disposal. While online bill pay capability exists within the framework of a prepaid card, its usability is contingent upon whether or not your biller recognises and accepts MasterCard and Visa, Cheques, or ACH withdrawals. Below, we summarize different types of payment and explain how the prepaid card model fits within each one:
Billers That Accept Cheques
A number of prepaid cards provide an online bill pay option that allows you to reimburse practically any biller who does not accept plastic. For this to work, your prepaid card provider will issue a cheque on your behalf and mail it to the intended recipient. If you would like to know which prepaid card providers can provide this service (and if they charge for this service), you can do a simple prepaid card comparison.
Billers That Accept ACH Payments
An ACH payment is when a particular biller requires your bank routing number as well as your bank account number, so they can routinely withdraw money from your account on a defined basis. While prepaid cards do provide you with a routing number and account number, they cannot be used with this type of recurring payments. The prepaid card account numbers are used for direct deposits and disbursements, not ACH withdrawals.
Billers That Accept Plastic
If your biller accepts payment by traditional debit and credit cards, then a prepaid card payment will absolutely be recognised. Of course, you must have linked the card with your name, but once you have done that you can use it just like a traditional debit or credit card—provide your name, card expiration date, and account number, and you’re done.
Sufficient Funds Requirement
Regardless of how you are using your prepaid card, if you are setting up recurring payments, it is vital to ensure you will have adequate resources in your account each billing cycle. This may seem obvious, but it can be easy to forget or neglect recurring bills once we have started an easy-to-use payment process. Many debit cards allow you to opt-in for account overdraft protection (for a fee, of course), which will cover the cost of your cyclical outflow if you happen to have insufficient funds, and credit cards, by nature, offer a line of credit and authorize the carried balance (with interest) if you have inadequate funds and cannot pay your bill. Prepaid cards on the other hand, only allow you to spend what is in your account. If you ignore your account or lack sufficient funds, your prearranged automatic payments will not be completed; in turn, late fees could be levied or unwanted service interruptions may arise. So regardless of what method you use to pay recurring bills, having adequate funds is essential.
Conveniently, prepaid cards come with a number of different loading options to help ensure this, but one of the best ways to guarantee you have sufficient funds is to either organize direct deposit of your salary into your prepaid payroll card account or schedule automatic transfers from your bank account to your prepaid card each month. And then, you can easily set your automatic payment parameters and truly forget about it.