Prepaid Debit Cards: The New Reverse Credit as Credit Cards Crumble?

After so many financial experts in the media started deriding the credit card industry as borderline leaches, it persuaded me to look into the idea of instead buying a prepaid debit card last year at one of my local financial institutions. While we all know what a bank debit card is (something that inexplicably doesn't completely overtake having to handle germ-infested cash in our bare hands), a prepaid debit card is slightly different in that you can use it in the guise of a credit card in the internet world. Bank debit cards aren't typically accepted online for the simple reason that it's about as risky as a credit card in the assumption you'll have the money in your bank account to pay for the product you're purchasing. With a prepaid debit card, you can purchase something online and feel good that you've already paid for it.

After doing my research on the ins and outs of these cards, I noticed how many people were supposedly using them around the country. According to the website for the card I was considering using, it said that several million people were now using theirs. While that seemed small, I figured combined with all the other companies putting out prepaid debit cards by the dozens, the totals were probably close to double digit millions. Of course, most of those people were probably college-age kids who perhaps get forced into using prepaid debit cards because their parents don't trust them in running up debt on a credit card.

That might change, though, once every other age group realizes the advantages of prepaid debit cards and throwing up their hands at dealing with the perpetually corrupt credit card industry. Despite President Obama's recently announced changes to how credit cards deal with their customers, I see a future where the credit card ceases to exist--mainly as the result of a long-delayed wake-up call in realizing the better alternatives. It's not outrageous to say that had prepaid debit cards existed twenty years ago, America's financial woes would have been considerably lessened in the harrowed time we're in now.

But once these cards became available, the companies putting them out weren't going to make it overly simple in using them without an outstretched hand. When something is overly convenient in the world of finances, you're going to be laying out extra money in fees. The biggest drawback to using prepaid debit cards, especially in purchases through your local retailers, is in the fees that can easily add up if you use the card more than once during a shopping trip.

My initial reason for deciding to get one was in the ability to use it online without having the potential trouble of debt going shopping crazy during the holidays on Amazon.com and all the other online retail behemoths. And once you decide to purchase a prepaid debit card, you'll generally only have to pay a one-time activation fee of around $10. Keep in mind, though, that there's usually a $3 surcharge every time you load money onto the card. Then there's the two particular fees slapped onto your card depending on where your purchases are made.
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Since online purchases are where likely most credit cards are used (well, other than giving out one's credit card number over the phone to a utility company or cable outlet to pay an exorbitant bill), a prepaid debit card used on the net would be one of the best places to avoid the highest purchasing fees. For most cards, an online purchase would entail only a $1 charge per purchase. One secret I found to avoiding multiple $1 charges is to buy numerous things on Amazon.com as a bundle so the card will recognize it as one full purchase rather than individual buys.

As I let on earlier, however, it's the purchases in your tangible retail stores where you'll get smacked with a slightly larger fee of $2 per purchase. In those scenarios, it's probably better to just use cash since the threat of credit card number swipes are becoming more common in establishments of all kinds. Yet I foresee an era where places such as Amazon.com will merely ask for your prepaid debit card number rather than a credit card. That's only because credit card companies, out of pure logic, don't have any rhyme or reason for surviving for the next fifty years.

I say this out of the inevitability of more unprecedented debt America will accrue in the future, no matter the forced changes for credit card companies to lower their interest rates. Job losses are something that won't change any time soon as long as there's no attempt to stop outsourcing in dozens of career fields. All of that means more use of credit cards to get by financially. Or, it could also mean an American epiphany to obtain a card that forces you to stay within your means. The use of it also resets the mind into living within one's means and realizing borrowing only makes things worse, even when paying a bill.

In the world of bills, negotiating for time payments is, inexplicably, the least considered option rather than maxing out a credit card for the full balance of the bill. If you have income from a job or whatever source, then using a prepaid debit card enables you to put what you think you can spend on the card in advance so purchases will be done and paid for within minutes of the purchase. On a different psychological level, these cards can give a person the same feeling of using a credit card online so one doesn't feel left out in the cold if a credit card can't be had or used because of bad credit.

Other than the bankruptcy of Social Security and our general financial institutions, prepaid debit cards could potentially save us all in the rollercoaster era of how finances are made and spent. Purchasing things with a credit card has always been a process of fooling the mind into thinking we can get it all without any immediate consequence. Once all age groups understand that and take advantage of a prepaid debit card, no more will we have to hear from financial pundits about how credit card companies are worsening our financial system.

Yet as anybody would warn about the newest things that usurp something inferior, the better product inevitably starts charging more once going mainstream. Watch for those added fees on prepaid debit cards to increase once they're used by everybody. Then we'll have something taking the place of increased credit card interest rates if still a lesser evil having a card reversing the irresponsible process of credit...

Source:

http://www.money-zine.com/Financial-Planning/Debt-Consolidation/Prepaid-Debit-Cards/