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I’ve been in the financial services space for several years now and I’ve seen lots of products and financial tools come and go. One of the more recent tools to hit the market is a remarkably useful one – the prepaid debit card.
It’s every bit as convenient as a credit card but with nowhere near the risk. Plus, the approval process is a snap because there are no credit checks! So you can apply for any of the offers listed below right now.
| READYdebit Prepaid Visa Card | |
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| Apply Now | |
| RushCard Prepaid Visa Card | |
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| Apply Now | |
| AccountNow Prepaid MasterCard | |
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| Apply Now | |
What is a Prepaid Debit Card?
A prepaid debit card is a plastic Visa or MasterCard that’s bank-issued just like any credit card you’ve ever seen. They look, feel, and act just like their credit card cousins. But there’s a real big difference when it comes to how they handle your money. You see, credit cards basically allow you to spend money you haven’t earned yet, but pre paid debit cards only allow you to spend money you already have. That’s a huge difference in risk!
Have you ever gotten into trouble with a credit card? I know I have – and I should really have known better because finance is the game I’m in. That just goes to show you how risky credit cards can be. But that never would have happened if I had been using a reloadable prepaid debit card. I never would have been able to charge past my balance limit, or had my interest rate raised, or been hit by a bunch of hidden fees when I slipped up.
How Does a Prepaid Debit Card Work?
A prepaid card works from a pretty simple model – you load your account up with cash first, then you spend that cash. I said it was simple. The cards themselves are accepted anywhere credit cards are accepted. That means you can use the cards to make everyday purchases at local stores or you can use them online or over the telephone too. You can also use prepaid cards with your not-so-everyday transactions like hotel stays and car rentals. Prepaid debit cards can even be used at ATMs.
When you’ve spent your account balance down you can reload more money just about any time you’d like. Or, if you don’t want to use the card anymore, you can simply choose to spend all of your balance and throw the card away. There are no heavy-duty contracts involved with a prepaid card so you’re under no obligation to use it. Of course you could just pick up another card if you’d like too – most prepaid debit card companies will allow you to have multiple accounts active at the same time.
How Do You Load a Prepaid Card?
You load the cards in a few different ways. You can either load them with cash, with a check (sometimes), or with a direct deposit.
The most common way to load up a prepaid reloadable debit card is by going to a retailer and purchasing a “reload pack.” These are usually bar-coded cards that individual prepaid card companies sell right alongside their Visa and MasterCards. You pick one of these off the rack and take it up to the cashier. There, you pay a charge for the reload card itself (somewhere between $3.00 and $9.00 depending on the company) and whatever amount of money you want to load onto the card.
For instance, if you wanted to load $100.00 onto your card with the Green Dot MoneyPak, you’d pay the cashier $104.95 – that’s $4.95 for the MoneyPak and $100.00 for the load. Then you’d need to go onto your card company’s website or call their customer service line to transfer the $100.00 from the MoneyPak to your card.
A slightly different way to load your card involves a straight “swipe” of the card at the cashier’s register along with your cash. It’s the same deal money-wise but the cash is loaded directly onto your card and you don’t have to go onto a website or call anyone.
If that isn’t convenient enough for you, you can set up a direct deposit to your card’s account. Almost all cards nowadays are direct deposit debit cards. These types of ACH deposits are pretty safe and routine – that’s how I load my card up. I’ve set up a deposit directly from my paycheck to my card. The money’s there right on payday and it never misses a beat. Plus, since my deposit is a certain size, I don’t have to pay a reload fee.
Where Can I Get a Prepaid Debit Card?
You might be very surprised at just how many places you can get a debit card these days. I know I was. For instance, unlike credit cards and bank account debit cards, reloadable debit cards can be purchased in many, many stores. That’s right, I said purchased because you don’t apply for a debit card, you buy it – but more on that in a bit. You’ll find the cards in most large grocery store chains, most large drug store chains, and of course just about all the big department stores too. You’ll find the cards in a lot of the smaller chains as well – they’re very popular items and are becoming big sellers.
To purchase one you simply march right up to the section of the store where all the various specialized gift cards are displayed and you pull one of the debit cards off of the hook and take it up to the cashier. What you pay depends on the particular card you buy. The cards themselves will cost you somewhere between $3.00 and $10.00 – that’s a one-time purchase fee. Then you’ll need to load it up with another $10.00 to $20.00 as a minimum.
If going down to your local retailer isn’t your cup of tea, you can also get a prepaid MasterCard or Visa over the Internet. I can’t think of a single pre paid debit card company that doesn’t sell their debit cards online. So you’ll find a large selection without ever having to leave your laptop. There are a couple differences between the in-store and online debit card purchase experience to take note of though.
For instance, you won’t have to pay a dime when you go online – no money passes hands. You will have to fill out a short debit card application though. Now mind you, this isn’t a credit application or anything like that. It’s more of an identification application so the company can make sure you’re a real person with an address they can mail your card to.
When you’re finished, you often get an account number that you can use (online and over the phone) while you wait for your plastic card to be delivered to you (usually in a week or two). You can load up the account number with cash or wait until your real card comes in the mail. Be forewarned though. The purchase fee will be taken out of your initial load, so even though you’re getting your debit card online, you’ll still pay a purchase price for it.
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