Anyone who surfs the net or watches television is bound to come across an advertisement for a prepaid debit card. Initially, these cards were created for the credit challenged – those who had bad credit and no other means to obtain any type of credit card and they were often associated with low-income or unemployed people. Today, people are finding that prepaid credit cards are quick and easy to use.
You can send money to someone across the country without having to use your interest bearing credit cards. Just like credit cards, you can use these cards anywhere that displays the MasterCard or VISA logo. You can also use them at certain ATMs (depending on the card) to withdraw money.
What's the difference?
A credit card gives you a line of credit, which you have to pay back. A prepaid debit card is loaded with a specific amount that you put on it and that determines your spending limit.
With advancing technology and the increasing number of identity thefts, using a prepaid debit card is an easy way to make purchases or send money without revealing your personal information and because these cards will only allow you to spend what you have put on them, even if your card gets lost or stolen, they thief will only be able to access what is available on the card.
Prepaid debit cards are a perfect way to help teens develop good spending habits. Parents load a certain amount of cash on the card (sometimes even their allowance) and when it's gone, it's gone. This is great for young teens traveling away from home.
For students who are away at college, parents can load money on the card eliminating the need to send checks, worry about overspending on charge accounts, or overdrawing bank accounts.
Sending money to others
A prepaid cash card is a convenient way to send money to others. Cash is risky and not recommended. Local money transfer retail locations can be expensive. Money orders and checks, they have to go to the bank to cash. With a prepaid card – they receive the card, activate it, and they are all set. If you send money to someone on a recurring basis, you can load the card from your location and they will receive the funds on their card. It just does not get any easier than that.
Picking the right card
Although most cards all work in a similar fashion, some have their own stipulations. Here are a few things you should check before choosing your card.
- Is there an activation fee?
- Is there a fee to load money?
- Is there a fee to withdraw money?
- Is there a certain amount put on "hold status" if used at a gas station? (Some hold as much as $ 50.00 until the payment clears).
- Can I reload my card online?
These are just a few of the frequently asked questions. Be sure to carefully review all of the information before you decide on a card.