The Benefits of Using a Prepaid Debit Card

First you need to know what a prepaid debit card is before you can know what the benefits of having one are. A prepaid debit card is a reloadable card that you can add money to in a variety of ways. You can use it in addition to or to replace an ATM/debit card. Some people referred to as the 'unbanked' (no bank account) usually have lower incomes or be getting paid 'under the table'. They may not make enough money to consider opening a bank account or may not be able to produce the necessary documentation to get an account. Sometimes, these individuals (especially immigrants) are targeted by criminals because they tend to carry large amounts of cash on them. You also don't need to have a credit check or ChexSystems check to secure a card. A prepaid debit card allows these people to be able to have more versatility with their spending that they wouldn't normally be able to do unless they had a bank account. Simple things like shopping online, paying bills online or over the phone, reserving a hotel, renting a car, etc. are made easier and safer when you can use plastic to pay.

If you do have a bank account, you may like to have a prepaid debit card as an alternative if you have a habit of having your account overdrawn whether it was an oversight on your part or an erroneous charge of a merchant. Prepaid debit cards may have a small fee of $1.50 or sometimes no fee for an overdraft. Also, as opposed to a bank, a prepaid card will decline some charges if there aren't enough available funds. Many times banks will pay even though you have no funds in your account and slap you with high overdraft fees for each charge that comes through. So if you have one bounced check and you had four other point of sale purchases from your debit card at the same time of the bounced check, you'll get hit with NSF charges for the check AND the four purchases. One small oversight can cost you BIG time eating up funds you may need to pay your rent or the like. When you're living paycheck to paycheck, many times it isn't worth the high probability of incurring exorbitant overdraft charges.

This type of card is beneficial too if you're on a limited budget and need to do a better job of managing your spending. Most of the time, when you are using a credit or debit card, we are easily tempted to overspend which can lead us into debt problems or being in a bind until next payday. The amount of personal debt many people are carrying is staggering. Only a few savvy consumers seem to be able to avoid this trap of the masses. When you give yourself a certain amount to spend on a prepaid debit card, you only have a certain amount of funds you allot yourself and when that is gone, that's it. It's like using cash to pay for your needs, but safer than carrying cash.

Another good reason for prepaid debit cards is if you have teenagers, a college student, or other financially dependent loved one and need to get money to them quickly, inexpensively, and easily. This can teach them good financial management practices to benefit them when they are on their own. It's a better option than having them constantly asking for your card.

One downside to these cards is that some tend to have high fees depending on your transaction habits. I've researched several different cards and have found one to have reasonable fees and excellent features perfect for my spending habits. This card is called Ready Debit. You can easily load cash onto this card from Paypal, direct deposit, Green Dot MoneyPak store locations, or a checking or savings account. You can pay for purchases anywhere Visa is accepted as well as withdraw cash from any ATM with a Visa, Interlink, or NYCE logo. You can also sign for point of sale purchases and your transaction is guaranteed to be covered by Visa's Zero Liability policy.

It's important to know that you do have options when it comes to how you manage your money. I think prepaid debit cards can become more popular as people become more aware of the benefits.