There was a time when plastic was reserved for toys and bottles. Everyone used cash and store credit, or they did not buy what they wanted until they had enough money saved up to buy it. Today, everyone carries credit or debit cards, or perhaps a few of each. While I am not delving into the subject of credit cards today, I do want to talk about debit cards, and more importantly, prepaid debit cards.
What Are Prepaid Debit Cards?
Similar to bank debit cards that are connected to your checking account, a prepaid debit card works only when there is money “on the card”, or placed in your account. You do not need a checking account, as this is basically an online checking account.
Benefits of Prepaid Debit Cards
With a prepaid debit card, there is no need to carry cash when you are out shopping. (I personally like carrying cash, but that is another story.) You can use it just like a debit or credit card at many major shopping venues. You can have your check directly deposited onto your card, and you can pay bills with it just like your checking account debit card. And if you have bad credit, this may help you get started building up your credit again. Many companies will approve you with bad credit.
Disadvantages of Prepaid Debit Cards
In spite of how many benefits are presented to you by slick marketing websites, there are a few disadvantages to having a prepaid debit card. The fees associated with the card may be more than you would find with a checking account. Some have an activation fee or monthly fees charged to your card. Others will have ATM withdrawal fees or bill paying fees. Even just to get a paper statement, you may find fees. If you have a choice, maybe the fees route may not work for you.
Prepaid debit cards are not for everyone. But if you are just trying to get a clean credit history again, maybe this is the next best thing to a checking account. At least you will not have a large bill to pay because of your shopping activities, as the money is taken directly from your account.