One of my favorite “secret sauce” approaches to running a business is buying and using prepaid credit cards at stores. Yes, they’re exactly the cards you’re thinking of, too — those card racks lined with American Express and Visa gift cards that can be purchased and loaded with varying cash increments.
It might not look like it on the surface, but prepaid credit cards offer entrepreneurs plenty of hidden benefits that go well beyond splurging on catered lunches and coffee for the team. Here’s what you should keep in mind if you’re considering using them for yourself or passing them out to your employees.
A safer alternative to company credit cards
Imagine you’re running a newly launched startup and you’ve hired several employees. Some of these employees may have positions that require them to have a company credit card for expenses. You’re torn about what to do next. On the one hand, you could distribute company credit cards out to those that need them, put a cap on the spending limit, and conduct monthly reviews of expenses. However, you might be concerned about spending too much during the startup’s early days and maybe even unsure if you can trust new hires with this kind of responsibility upfront.
Rather than run the risk of overspending or fraud issues, consider giving out prepaid gift cards with pre-established cash increments to your team. They can use them to pay for smaller expenses, like travel or office supplies, while you are entrusted with the bigger ticket items. As an added bonus, you can visit the card’s website and check in on your remaining balance. Some prepaid cards, like Mastercard, even offer the ability to track purchases.
Punch up your prepaid card with some personalization
Handing one of your team members a prepaid card in lieu of a company credit card can feel like akin to giving them a gift card to Starbucks. Sure, it’s appreciated, but it’s also a bit of a generic gesture. Many card companies, including American Express, offer the ability to customize prepaid cards. You can add in the name of the recipient to be printed on the card and include a personal message. Your team members will take notice and feel just as valued and important as they would with a company credit card.
It’s not hard to get (or use) prepaid credit cards
As I mentioned earlier, these cards can be purchased at most participating retail stores or online at the financial services website by virtually anyone. Unlike credit cards, you won’t need to worry about being approved first since bank accounts are not required. If you buy your prepaid card through a major card company like Visa, American Express, or Mastercard, you’re guaranteed universal acceptance to use the card as a form of payment, too.
The one caveat here is that some destinations do not accept gift cards as payment. In that case, you may need to work out an arrangement with your employer to hang onto your receipts and to be reimbursed at a later date for work-related spending.