What Are Prepaid Debit Cards?

Think of prepaid debit cards as alternatives to regular credit cards. They look just like their credit card cousins because they’re actual MasterCards and Visa cards. But they have different features and benefits. And one of the biggest differences is that, unlike credit cards, prepaid debit cards are easy to acquire because:

You Don’t Need a Bank Account
You Don’t Need Any Credit

That’s right. You don’t need any credit or even a bank account to acquire one of these cards. So there are no long applications to fill out and no credit checks. This makes prepaid cards perfect for people who have bad credit or even no credit at all.

Yet a prepaid Visa card or a prepaid debit MasterCard can be used just like any other plastic credit card. They’re accepted all over the world. So you can use them to purchase everyday in-store items, you can buy online with them, or you can even use them at ATMs. Here’s how you get one.

The best prepaid debit cards can be purchased from either a retail store or an online website by paying a flat “activation” fee. Depending on who’s selling you the card, that fee could be anywhere from $3.00 to $10.00. For that fee, you’ll get what’s commonly known as a “temporary” card, one that isn’t personally engraved. Note that sometimes an online prepaid debit card website will provide you just with the card number that you can use online until a physical card arrives in the mail.

When you purchase the card, you also load it up with your cash, usually in some amount between $20.00 and $2,000.00. Typically, your money is available on the card within minutes and you can begin using the card immediately.

Soon after that you’ll receive a “personalized” card in the mail (most personalized debit cards take one to two weeks to arrive). It will have your name embossed on it along with a valid expiration date. This card replaces your temporary card and can be reloaded with cash, again and again so you can use it anywhere credit cards are used.

The prepaid card companies make their money by charging you certain fees, not interest (like a credit card APR). For instance when you reload money on a card with a reload pack you’re normally charged a “reloading” fee. But these fees are typically small (usually in the $3.00 to $6.00 range), and they never approach the interest charges you’d normally incur with a credit card.

You manage your debit account just as you would any credit card account, by using the phone, the web, or even paper statements. So you can keep track of what you’ve spent and where you’ve spent it. Plus you can always know what your available balance is so you know exactly how much you have left to spend.

A prepaid debit card allows you to take tighter control of your budget. So much so that you might even find yourself getting by with no cash. It also helps you to protect yourself from the kind of overspending that can happen with credit cards. Plus you can shield yourself from the outrageous fees banks charge when you go over your limit or miss a payment.

Another benefit personalized prepaid debit cards have is that they’re great financial learning tools for your children. Teenagers can benefit greatly by having their own student visa debit card for instance. It gives them a taste of financial freedom but keeps you in control of their spending.

Prepaid debit cards are more popular than ever before. They have many of the same features that normal credit cards have and they’re easier to obtain. Plus, they really do give you more power to manage your money. And that translates into peace of mind, which we can all use a little more of in today’s economic world.

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