Personal Finance

Using prepaid credit card to save money?

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  • May 15th, 2020 5:12 pm
Deal Addict
Dec 29, 2012
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Using prepaid credit card to save money?

Am desperately trying to save some money this year, by limiting my credit card purchases to $2000/month (hardly ever use cash). What I'm thinking is to get a prepaid credit card and to only spend off this until limit is reached, and to use my other credit card only for really essential items like fixed monthly payments and emergency items. Is this a good idea or is there a cash card that I can get? What prepaid credit card do you recommend and what cash card do you recommend that requires minimal set up and is accepted widely online and at stores? Creating a budget hasn't helped me at all Disappointed Face
21 replies
Deal Addict
Jan 4, 2019
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Sounds like an impulse buy issue and a prepaid card won't help.

Try the cash in envelope method.
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Dec 24, 2007
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There are generally fees for using a reloadable credit card so do your homework if you plan to do this route, look out for reload fees and go with a low annual fee card. Prepaid MasterCards
Deal Addict
May 16, 2017
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ReadAllTheDeals wrote: Sounds like an impulse buy issue and a prepaid card won't help.

Try the cash in envelope method.
A prepaid card is an electronic form of "cash in the envelope".

Using a prepaid card as one form of budget management tool can be effective. The risk is your "emergency" clause for the standard credit-card. There are "unexpected" expenses and then true emergencies. Suggest having 2 different prepaid cards to store funds for:
- discretionary spending,
- unexpected expenses,

And save the credit card for true, extraordinary emergencies in addition to pre-budgeted recurring expenses.
Deal Addict
Jan 4, 2019
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robsaw wrote: A prepaid card is an electronic form of "cash in the envelope".

Using a prepaid card as one form of budget management tool can be effective. The risk is your "emergency" clause for the standard credit-card. There are "unexpected" expenses and then true emergencies. Suggest having 2 different prepaid cards to store funds for:
- discretionary spending,
- unexpected expenses,

And save the credit card for true, extraordinary emergencies in addition to pre-budgeted recurring expenses.
Pre paid cards are expensive. Right off the bat you are at a bad start.

It's easy to use a credit card. Psychologically, you're better off with the cash in the envelope method. They are two very different methods and I wouldn't personally put them even close to the same level.
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Nov 14, 2003
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If you don't have a plan, prepaid cards won't help.

Maybe try a budget. Figure out what you spend on money now and before. Set the budget according to how you would like to spend money on and try to stick to that.
Deal Addict
Dec 29, 2012
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I have a detailed budget with fixed and variable expenses and monthly income. Problem is by the time I update the numbers end of every month, I've overspent - mostly on sale items (have 500 teabags), spare items like what if my kettle/microwave /laptop breaks, and vitamins of which I have about 25 types of unfinished bottles. Also multiples of items, e.g. that's a cool shirt, let me buy 3 colours and 2 extra, same with sports shoes (have 3 identical pairs of which I only wear one) and anything comfortable. I always pay off my credit card full, so I vow to be frugal the following month, hasn't worked. Leaving the cc at home doesn't work either as I order online for store pickup Neutral Face I don't buy junk though so everything is functionally useable but I'd like to have more savings than things now.
Member
Nov 24, 2019
445 posts
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Saskatoon
Yeah, that's an impulse buy issue. If you're looking at a budget you made and still don't have the control to not buy a bunch of shirts and shoes just because, then I don't see how a prepaid card is gonna help.
Deal Addict
Dec 22, 2007
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Mississauga
Catnippy wrote: Am desperately trying to save some money this year, by limiting my credit card purchases to $2000/month (hardly ever use cash). What I'm thinking is to get a prepaid credit card and to only spend off this until limit is reached, and to use my other credit card only for really essential items like fixed monthly payments and emergency items. Is this a good idea or is there a cash card that I can get? What prepaid credit card do you recommend and what cash card do you recommend that requires minimal set up and is accepted widely online and at stores? Creating a budget hasn't helped me at all Disappointed Face
just get a credit card with a $2000 limit ?
Deal Expert
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Jan 9, 2011
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A friend froze all of his cards in a block of ice and started using cash for everything. He said having the cash in his hand made it seem more real and finite, and so he spent less of it on frivolous crap. He says it worked for him and he saved a lot of money. We on RFD like to think we know better, but maybe he’s on to something.
Sr. Member
Jun 14, 2016
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First step to saving money is to get off RFD!
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Nov 14, 2003
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LaLaLand
Catnippy wrote: I have a detailed budget with fixed and variable expenses and monthly income. Problem is by the time I update the numbers end of every month, I've overspent - mostly on sale items (have 500 teabags), spare items like what if my kettle/microwave /laptop breaks, and vitamins of which I have about 25 types of unfinished bottles. Also multiples of items, e.g. that's a cool shirt, let me buy 3 colours and 2 extra, same with sports shoes (have 3 identical pairs of which I only wear one) and anything comfortable. I always pay off my credit card full, so I vow to be frugal the following month, hasn't worked. Leaving the cc at home doesn't work either as I order online for store pickup Neutral Face I don't buy junk though so everything is functionally useable but I'd like to have more savings than things now.
It sounds like you have a mild shopping addiction and an excess inventory problem.

Sale items often cause people to buy more than they need. It is almost always better to buy only one item at full price when you are out or about to run out rather than multiple items at a discount in advance. The only exception I can think of is toilet paper. Don't want to run out of that! Face With Tears Of Joy

If you take an inventory of what you have than is surplus you would probably be shocked at the value. Also items like computers and small appliances don't go up in value over time, they likely go down, especially computers, so it is technically more expensive if you buy in advance. Plus the fact that it is sitting there being unused is a waste of money. The other issue is if an appliance does fail in the future and the spare is defective, you are out two appliances.

If you don't need the item imminently, do not buy it. A simple strategy, but it may take some discipline on your part.
Last edited by batcave on Jan 22nd, 2020 6:46 pm, edited 1 time in total.
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Sep 6, 2018
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Kiraly wrote: A friend froze all of his cards in a block of ice and started using cash for everything. He said having the cash in his hand made it seem more real and finite, and so he spent less of it on frivolous crap. He says it worked for him and he saved a lot of money. We on RFD like to think we know better, but maybe he’s on to something.
My partner says the same thing about using debit, even though there's no "cash" involved. I think there's something to the psychology of your cash going down rather than your "credit balance" going up.
batcave wrote: Sale items often cause people to buy more than they need. It is almost always better to buy only one item at full price when you are out or about to run out rather than multiple items at a discount in advance. The only exception I can think of is toilet paper. Don't want to run out of that! 😂
For me it's deodorant! I use a single brand/type and refuse to pay $5+ when we know it goes on sale for under $2, so we stock up even if we've got a few at home.
Newbie
Jul 5, 2016
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Koho might work in your situation. Virtually no fees (only a 1.5% Foreign Transaction Fee) and you still get cash-back for your purchases. You can only spend what you load to the card. Has almost all of the functionality of a traditional Chequing account but works like a Visa credit card. I’ve been using it as my daily driver for some time and really like it.
Last edited by Shaner on Jan 23rd, 2020 8:46 am, edited 1 time in total.
Reason: Referrals aren't permitted on RFD
Sr. Member
Feb 14, 2018
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PMcNamara16 wrote: Koho might work in your situation. Virtually no fees (only a 1.5% Foreign Transaction Fee) and you still get cash-back for your purchases. You can only spend what you load to the card. Has almost all of the functionality of a traditional Chequing account but works like a Visa credit card. I’ve been using it as my daily driver for some time and really like it.
I also recommend Koho if you want to go the prepaid route.
I find the service was good. I think they are adding a feature soon so you earn interest on the money you have sitting on the card.
Deal Addict
Feb 28, 2014
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WetCoastGuy wrote: There are generally fees for using a reloadable credit card so do your homework if you plan to do this route, look out for reload fees and go with a low annual fee card. Prepaid MasterCards
If the OP can get prepaid reloadable credit cards like STACK, KOHO or the new WealthSimple Cash, these cards are absolutely free with no reload fees. So those could be better options.

or you know, technically debit cards tied to chequing accounts are also "cash in envelope" itself as well lol.
Deal Addict
Jan 4, 2019
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deltatux wrote: If the OP can get prepaid reloadable credit cards like STACK, KOHO or the new WealthSimple Cash, these cards are absolutely free with no reload fees. So those could be better options.

or you know, technically debit cards tied to chequing accounts are also "cash in envelope" itself as well lol.
You're missing the point. It isn't the same thing at all. Physical cash versus swiping a card are two very different actions with different feelings involved. It is much easier to blindly swipe a card until it is empty compared to physically seeing the cash available.
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Jun 23, 2017
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Catnippy wrote: Creating a budget hasn't helped me at all Disappointed Face
CREATING a budget is the easy part. Having the discipline and resolve to adhere to a budget is the part that requires work.
Deal Guru
Jan 19, 2017
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905P4N6 wrote: CREATING a budget is the easy part. Having the discipline and resolve to adhere to a budget is the part that requires work.
Hire a public trustee to limit how much you can spend each month.
Deal Guru
Aug 5, 2006
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Global Village
Look into the new Wealthsimple Cash account, your $ sits there collecting 2.4% interest and they'll be launching a prepaid cc for it. But you have to train yourself to stop buying things you already have until they COMPLETELY run out.
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