About Prepaid Debit Cards

The Benefits and Drawbacks of Prepaid Debit Cards

Prepaid debit cards can be great assets. They work like regular credit cards in that you can use them wherever credit cards are accepted. However, they do not allow you to run up a credit card balance that is charged interest. You fill Visa debit cards with whatever amount you choose, and then you can use them until the money is used up. When the money is gone, you will no longer be able to use the card unless you choose to add more money to it.

If you have heard of debit cards, chances are you have some questions. Are they safe to use? What are the best debit cards available? Do they cost money other than the money you place on them, or are there free debit cards available? Here is some important information about prepaid debit cards that you need to know before using one.

Benefits of Prepaid Debit Cards

There are many benefits to using these types of debit cards. First, they are far safer than carrying cash in your purse or wallet. If someone steals one of your Visa debit cards, you simply call the credit card issuer, have the card canceled, and they will send you a new one. If someone steals your cash, your only option is to get help from the cops and at times wait in vain.

Debit cards are also a solution for those who are in a bad credit situation and cannot get a regular credit card. You can use a prepaid card anywhere that takes a regular card. Many of these cards do not require a PIN number, and they run through the credit card machine like any other credit card. The only difference is that they do not carry a credit balance. This means that your credit score does not matter. You can get one of these cards with a Visa or MasterCard logo on it even with the worst possible credit score. This means that you can now reserve hotel rooms and get a rental car even though your credit rating is horrible. When you shop online debit cards work great!

The best debit cards also make it easier to budget and control your finances. You can limit what is put on the card, and you may even get a statement showing where the money was spent. In this way, you can better track your spending or the spending of someone else in your family, while at the same time allowing yourself the convenience of having a card that works like a major credit card.

Downsides to Prepaid Debit Cards

So are debit cards perfect? No, they aren't. Like most financial resources, even the best debit cards have their downsides. Here are some you will want to consider.

First, some prepaid cards are actually more expensive than credit cards. Some of them charge high fees to use their services. If you pay off your credit card in full and on time each month, this may be a cheaper option. Otherwise, you need to make sure you are only looking at free debit cards because those that charge fees can get expensive.

Another downside to using a prepaid card is the fact that you will not be benefiting from a credit card rewards program. Most major credit cards have these rewards programs, and you earn points whether or not you carry a balance on the card and are charged interest fees. However, this is changing, and some major credit card providers are putting rewards programs on their prepaid debit cards as well. These are rarely the free cards, however.

Finally, debit cards have little impact on your credit score. They can keep you from lowering your credit rating further by adding the protection that comes from limiting your spending. However, they do not make much of a difference on your rating in and of themselves, if they are posted on your credit report at all.

Which Card Is Best?

If you feel that a prepaid debit card is right for you in spite of the downsides, you need to find a good one. Which prepaid debit card is best? The answer depends on your needs. Look for a card that does not charge many fees for its use. You also want one that allows you to load more money onto the card via the Internet. Online debit cards are great because you can reload them any time you have access to a computer, even if you are traveling. Finally, choose a card that has a Visa or MasterCard logo, so you can use it anywhere you need to use a credit card.

Prepaid debit cards offer protection and convenience. If you would like to protect yourself from the hassle of carrying cash, without putting yourself at risk for building more credit card debt, MasterCard or Visa debit cards are a great choice. Take your time and shop around to find the best one, and you can soon be benefiting from the convenience of a prepaid debit card.