Prepaid debit cards are very popular with travelers and people who are budgeting and saving money, or those who don’t want/can’t have a bank account. But, not many people know how they work. So let’s take a look.
What Is A Prepaid Debit Card?
A prepaid debit card is a way of banking that lets you spend only what you have preloaded onto the card. While a debit card typically has the backup of your full bank accounts and maybe even an overdraft, and a credit card uses the money you don’t technically have – a prepaid debit card is money smart.
It is often referred to as a pay-as-you-go card.
You can often use these cards at any retailer that accepts Visa or Mastercard – making it very easy to do your shopping or pay for things like petrol. Technically the transaction account is held by a bank. However, as mentioned, you can only spend what you have already put on it.
Who Can It Work For?
Well, there are a lot of situations that a prepaid debit card is a great idea. They used to most often be associated with people who wouldn’t get accepted for a traditional bank account. And while they are still great for those who don’t have a standard bank account, they have other uses.
Depending on the type of card you get, you might be able to use it while you are traveling. And, if you want a way to save up, without using a bank or another form of saving, then loading money onto a prepaid debit card is a great idea.
How Do They Work?
You should spend some time checking out different brands; for example, Green Dot Prepaid Card reviews is a great place to start. Following that, when your card arrives, you will likely need to activate it – perhaps through an app.
You can typically add cars in a few ways. Direct deposit is you have a bank account is a great option. Loading at participation kiosks, depositing cheques, bank transfers, and mobile cheque deposits.
While most people want the card to quickly pay for goods online, instore, others want to save it for later. So check that you can withdraw your cash from an ATM.
There might be some fees attached to your prepaid card. There may be a charge for activating it, or perhaps a monthly fee. But you can often avoid the fees by depositing by direct deposit or a regular amount. Different providers may attach limits to how much you can spend too. But you can find all of the details in the T&Cs during the sign-up process.
There are a few drawbacks, like the lack of support from some providers, that it has no effect on your credit rating if you are trying to build your score, and occasionally you may be the victim of technological outages that may block your card from use.
Overall prepaid debit cards and a safe and effective way to access your money, save or spend.