Cardinal Rules for Prepaid Debit Card Users

Cardinal Rules for Prepaid Debit Card Users

Prepaid debit cards, also called reloadable debit cards, appeal to a variety of users. The primary market for prepaid cards are unbanked people, that is, people who do not use banks or credit unions for their financial transactions, possibly because of poor credit ratings. To mitigate this dire need the U.S. federal government uses prepaid debit cards to make benefits payments to people who do not have bank accounts.

Prepaid debit cards are very popular because they enable users to buy goods without having a line of credit or even a credit check, for that matter. For example, following an account deposit, the card-holder can shop with his or her card wherever the credit cards are accepted. More importantly, since the amount one can spend is dictated by the currency deposited on the card, overshooting the spending limit, thus incurring debts, is of no consequence.

Never mistake Prepaid Cards for Credit Cards

Card users often make the error of treating their prepaid debit card like they would a credit card. This is not the way things work, however. If the card is to be kept active, users must deposit money. Therefore, it is impossible to charge more money than what is available. Also, regardless of the frequency of adding money in your card, there will be absolutely no change in one’s credit score.

Be wise. Moneywise!

Is there a downside after all?

It’s been tough going for prepaid debit cards of late, what with the count of fees generally levied by issuers. Despite its numerous plus points, such as the relative ease with which one can conduct financial transactions with “plastic money” minus the fear of exorbitant interest rates; the huge fees are enough to deter many consumers.

Ask any prepaid card user and you’ll learn that the regular, monthly maintenance fees are the most dreaded among their lot. Additionally, users are charged for engaging with customer service personnel, making balance inquiries, reloading/activating cards and so on. Month on month, these amounts add up to a level where you begin to feel the pinch, and it actually limits the currency you can operate with.

Another drawback, at least for those hoping to rebuild their credit, is that prepaid cards don’t usually report to the credit bureaus. Because you aren’t actually receiving a line of credit, the use of a prepaid debit card won’t help your credit score.

Vital Prerequisites

There are number of parameters users should check while ascertaining which prepaid debit card is right for them. Accessing the fee structure and schedule is very important. Find out which processes of yours can result in fees being. It is best to scout around for a card that guarantees to charge minimal fees, or even one that provides solutions to waive some kinds of fees.

Apart from the details mentioned above, you also need to scrutinize the exact services and offerings that will be given to you. These issues can be decided by asking yourself a simple question: Why and how am I going to use the prepaid card?

  • If the primary goal is to curtail spending, it is advisable to go in for a prepaid debit card. There’s no way you can spend more money than what’s available on your card.
  • Many, in fact, most people wish to save a little something for a rainy day. If you are of this mindset cards that offer robust savings options are right up your alley.
  • Given the hustle and bustle of life today, there’s hardly any time to keep a track of all the bills that have to be paid. Realizing this concern, many cards offer the choice of paying bills online for free. Go for it.
  • There are ways in which you can be charged without your knowledge—such as each time you load your card. You know what to do… avoid such cards like the plague!

By following these crucial tips, you too can ensure that using a prepaid debit card can be a joy, instead of becoming a reason for anxiety. Remember that every penny saved today will be beneficial in the long-run, when you make post-retirement plans or probably desire to manage debts.