Can You Use a Prepaid Card for a Recurring Payment?
Prepaid cards can be used for some, but not all, types of recurring payments. Their viability ultimately depends on whether a given biller accepts plastic or ACH withdrawals as well as the online bill pay features offered by your card. We will explain each type of payment below.
Billers That Accept Plastic
If a company accepts credit cards and debit cards, then a prepaid card will certainly be an accepted form of payment – provided that you have registered the card under your name. You will simply be able to supply your name, account number and expiration date just like you would with a credit card. This, for example, would cover magazine subscriptions as well as your Spotifys and Netflixs of the world.
Billers That Accept Checks
Many prepaid cards offer an online bill pay feature that enables you to pay virtually anyone who does not accept plastic. With online bill pay, your prepaid card issuer will cut a check on your behalf and send it to the respective entity that is charging you. You can get a sense of which prepaid cards provide online bill pay, as well as which charge for the service, by checking out our prepaid card comparison tool.
Billers That Accept ACH Withdrawals
Certain billers require you to provide a bank account number and bank routing number so they can automatically withdraw money on a monthly or otherwise regular basis. This is known as an ACH withdrawaland is the one type of recurring payment for which a prepaid card will not fly. While prepaid card issuers provide you with both an account number and a routing number for direct deposit purposes, they can only be used for deposits into your account – not withdrawals from it. It’s simply a quirk of how prepaid card accounts are structured.
Sufficient Funds Requirement
Regardless of whether you’re using your prepaid card like a credit/debit card or you’re employing its online bill pay feature, it’s essential to make sure you have sufficient funds in your account to cover the cost of your recurring payments each billing period. That might seem obvious, but we tend to forget about recurring bills once we have established a payment method and it’s therefore easy to also forget about your prepaid card balance. This could lead to your automatic payments not being made and, in turn, unwanted service interruptions.
Prepaid cards are more vulnerable to insufficient funds disruptions than debit cards and credit cards. After all, many debit cards enable you to opt-in for account overdrafts, which would cover the cost of your recurring expense even if you don’t have the full amount needed in your account. Credit cards obviously provide a line of credit and enable you to revolve a balance if you cannot pay your bill in full in a given month.
One of the best ways to ensure that you have enough money in your prepaid card account to cover the cost of your recurring payment is to either establish direct deposit of your monthly paycheck or set up automatic transfers from your bank account to your prepaid card account each month. Ultimately, the point of an automatic payment is to set it up and forget about it, and having to verify your balance every billing period would defeat that purpose.
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