You are probably familiar with the concept of a debit card. This usually refers to a card that is linked to a traditional checking account and has a major credit card logo on it, like Visa or MasterCard, allowing you to use it to buy items anywhere those cards are accepted. In addition, you can use it to withdraw money from your bank’s ATMs. These cards have become ubiquitous, because of their convenience and ease of use. But, they do have some drawbacks, including hefty checking account fees as well as overdraft fees. We want you to know that there is an alternative that may be a good option for you.
Prepaid debit cards are similar to prepaid cell phones that don’t require a monthly plan. You don’t need to link the card to a traditional checking account that may charge you monthly fees. Instead, you simply load the card with money, either through direct deposit or by giving cash to a prepaid debit card provider and then use the card as you would any other debit card. Many prepaid debit cards also allow you to pay bills and write “checks” using your account, completely replacing your need for a traditional checking account.
So, why might you want one of these nifty little cards? If you don’t always meet your bank’s checking account minimum and get stuck with pricey fees, you should consider a prepaid card. They can also be a convenient option if you are traveling internationally for a significant period of time, because you can avoid the hassle of setting up a foreign account. If you are one of those serial overdrafters we discussed before, you may want to try this type of card, since it doesn’t allow you to spend any more money than you have. In addition, if you pay your bills using a prepaid card, you can build credit history. This is particularly appealing if you don’t have good enough credit to get a standard credit card.
Basically, a prepaid debit card is a no-strings-attached approach to spending your money. If you are one of those people who likes to deal in cash and keep an inordinate amount of money under your mattress, in the sock drawer and in the cookie jar, we urge you to check this out. Trust us, it’s a lot more secure, and you don’t have to worry about keeping track of all your hiding places.