Prepaid Debit Cards function very similar to US debit cards. In a way, you do have to load your money into these cards and once they’ve depleted, you’ll have to load it again. They can serve as a budgeting tool or even a replacement to bank accounts and usually, there’s no credit check attached to getting a prepaid debit card is relatively easy to get. Before we get into the pros and cons of getting a prepaid card, it’s necessary to understand that these cards are not meant for everyone. If you need to build your credit, their are better options out there.
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Advantages Prepaid Debit Cards
- No Credit Check. Prepaid cards typically don’t require a credit check which is a viable option for those with bad or worsening credit.
- No Overdraw Risk: It’s physically impossible to overdraw on a prepaid debit card. If you don’t have any money in your account when you make a transaction, then the transaction will simply be declined.
- Convenient Reloads: There’s numerous ways to load your prepaid debit card: direct deposit, transfer from a checking account, mobile check deposit, cash load at Walmart, or purchase a “reload pack.”
- No Credit Risk: Prepaid Debit Cards aren’t reported to the three major credit bureaus so you don’t have to worry about any “credit dings.”
Disadvantage Prepaid Debit Cards
- Excess Fees: Majority of Prepaid Debit Cards charge fees, from activation to ATM withdrawals. You can find some exceptional prepaid debits out there with much fewer fees (the Walmart prepaid card with online purchases and free DD).
- Can’t Be Used To Build Credit: You will not be able to build your credit score with a prepaid debit card. Since your activity isn’t monitored and reported back to the credit bureaus. It will not help you improve your score at all. Look at better secured credit card options.
- Lesser Security or Insurance: When it comes to fraud and unauthorized charges, there are only a limited available prepaid cards out there feasible with protection compatibility. In addition, if you buy a product online and you do not receive your package, your money’s not going to come back.
- No FDIC Insurance: That means your deposits won’t be backed up to a guaranteed $250,000 of your money in case a bank fails. You may find a slim option of prepaid cards out there that have FDIC Insurance attached.
Prepaid Debit Card Features
Below is the typical features attached to most prepaid debit cards. Some features may vary. Furthermore, signing up for a prepaid debit card is a great alternative for normal debit cards. Plus, many cards don’t come with additional or hidden fees.
- No Credit Check or Credit Impact
- Free ATM network (varies)
Conclusion
Overall, there are many plus sides to getting a prepaid debit card. However, there are some downfalls to it as well. There are many things you can do with a prepaid debt card. If you’re looking into getting some prepaid cards for whatever reason it may be. I used prepaid debit cards for shopping bots and I never really had anything to complain about it. Just be cautious of what you are getting yourself into. I can’t stress this enough when I say to watch the fees, watch your spending. If you’re looking to build your credit, you can always check out our Best Secured Credit Cards or our compiled list of the Best Bank Deals, nationwide or local.
