To avoid the risk of overspending that comes with credit cards, and the inflated banking fees of checking accounts, more and more people are switching to the prepaid debit card. The popularity of prepaid debit cards has grown over the past few years, probably due to the effects of the recession. The concept behind the prepaid debit card seems to have been borrowed from the older concepts of prepaid international phone cards and gift cards. These cards allow the owner the option of loading some money on the card, and spending it virtually just like cash. The convenience and cost-effectiveness of the prepaid debit card have made it a more appealing choice than many traditional banking methods. Even with the many limitations to the banking solutions attached to prepaid debit cards, they have proven to be friendly to individuals who want to get a hold on their spending habits.

Benefits Of Prepaid Debit Cards.

  1. prepaiddebitcardsEase of access to funds: The money loaded on prepaid debit cards are easily accesible. No long line in banking halls. All a person needs to do is visit the nearest ATM or POS machine. These cards are accepted universally. The cards can also be used to make online purchases.
  2. Wage payment solution: Prepaid debit cards offer a safer avenue for employees to get paid their salaries. In these times where several payrolls are stolen yearly, a direct deposit into a payroll debit card saves the day. This way, regardless of your location, you'll have instant access to your wages, ths avoiding the long queues in banks to cash pay cheques.
  3. Solution for the unbanked: It is an affordable solution for individuals who do not have bank accounts. These individuals, armed with prepaid debit cards, can access cash, make purchases via mail order, pay for goods at grocery stores and gas stations and buy services off the internet.
  4. A self-help credit repair strategy: The reason prepaid debit cards are attractive to people who want to repair their bad credit status or get out of debt is that the money you spend with the prepaid debit card is your money. This makes it a wonderful tool for cultivating good budgeting and financial management skills. Most of these cards come with additional services which if activated, will report te user's spending habits with credit reporting agencies. This way people can avoid the impulse of overspending and the high interest rates attached to credit cards.
  5. Easy to obtain: It is less difficult to obtain a prepaid debit card than to get a credit card. Most times, applications for debit cards do not require employment verification, security deposits or bank accounts. Even individuals with bad credit histories can apply successfully. The waiting time for approval of applications isn't long.
  6. Avoiding banking fees: A consumer who owns a traditional bank account is plagued with numerous fees. Besides the stringent account requirements, the fees paid to keep your money in the bank include:
  • reloadablecardsAnnual account maintenance fees
  • Charges for closing accounts
  • Insufficient funds fees
  • Membership fees for credit unions
  • ATM withdrawal fee

These fees keep rising annually. They can be avoided by signing up for a prepaid debit card.

  • Perfect for travel: In order to avoid loss of credit cards, many individuals avoid taking them along on trips or vacations. Carrying cash isn't a good option too. The prepaid debit card could be the best option ; If they are lost or stolen, the risk to your funds are limited. Since they are not attached to your bank account, you don't have to worry about loosing all the money in your account.
  • Preventing identity theft: The rampant theft of credit card data has exposed lots of individuals to identity theft. Since the funds associated with prepaid debit cards are less accessible to identity thieves, they may be a safer alternative.

Drawbacks Of Prepaid Debit Cards.
-
debitcarduse Numerous fees and additional charges.
- There is no interest earned on the deposits on the debit card.
- Users of prepaid debit cards are excluded from provisions of the Consumer Credit Act.

Choosing The Right Prepaid Debit Card.

There are so many companies that offer prepaid debit cards and will contain the logo of major companies such as Visa, Mastercard, Discover or American Express. The essence of the logo is that the card can only be used for purchases where their logo is displayed. 

Consider how much fees are applied to the prepaid debit card whenever you are using it. There is the annual fee, ATM withdrawal fee, activation fee among others. Do not choose a company with a lot of exorbitant fees, this will not make your spending any easier. Try and check out several reviews and comparisons about the debit card providers on the internet to learn more about their services and rates.

Another thing to consider is how well is your money protected if the card is stolen. This is important as these debit cards can be easily be stolen and accessed by fraudsters. There is always a time frame for which you have to report the stolen card case or else there will be complications when it comes to reimbursing your account. 

Try and look at the practicability of the card usage. Get a card that can be used to make purchases anywhere. Consider getting a card with a Visa or Mastercard logo. These two companies are in every state and you will see their logos in most shops. You can always ask a friend as a referral to help in choosing the best prepaid debit card depending on your needs. 

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