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4 Things to Know About Paycards
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Posted January 19, 2016
1. A paycard is a form of payment by some employers
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If you have a part-time job or are looking to get one, your employer may give you payment options such as a check, direct deposit, or paycard. The paycard system though, is typically the least-common.
2. They are not issued by a financial institution
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Paycards are distributed by the employer and are not linked to any credit union or bank. This can cause confusion for users wanting to access money on the card. The best way to use money on a paycard is through an ATM. This may cause an issue for those who have specific amounts on their card, as most ATMs only give out denominations of $10 and $20.
3. It works like a pre-paid debit card
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Thankfully, paycards are similar to debit cards. The card brand is often MasterCard or Visa, which means it will be accepted by most restaurants and retailers. Because it works like a pre-paid card, it is impossible to over draw or over spend your money. Regular debit cards are attached to a checking account at a financial institution and can allow you to overdraw your account, but in return charge a fee for over drafting your balance.
4. They often have fees
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If you have a paycard, make sure to read the paperwork and understand fees that may be associated with it. Many times, the distributing company charges a fee for each withdrawal from an ATM and some charge an additional fee every time the card is swiped for a purchase. Those charges can add up over time and may end up costing you a lot of money. If you don’t read the terms of the card, you may not notice money being taken out of your account until it’s too late. Other fees may include a monthly maintenance fee or a card replacement fee if it is lost.
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