Since the first true cards were issued in the middle
of the 20th century, most consumers have had a love-hate relationship with the
little plastic rectangles: They love the ease and convenience of using them,
but hate the exorbitant rates and fees the cards may incur. Then, there are the
often stiff requirements a consumer needs to satisfy before even getting a
card. Fortunately, today’s prepaid debit cards let every consumer enjoy the
convenience of cards without the risk of over limit fees or high interest
charges on unpaid balances.
Prepaid debit cards offer multiple advantages compared
to regular credit cards. First, because prepaid debit cards are funded directly
by the person enrolled for the card, no one can be turned down. There are no
income limits and your credit score doesn’t matter. That means that just about
anyone anywhere can enjoy the same convenience of regular credit cards without
the need to qualify.
That convenience becomes especially important when
considering the second major advantage of prepaid debit cards: the ability to
do business online. Many online stores accept only credit or debit cards for
payment. Until the introduction of prepaid debit cards, shoppers without regular
credit cards were unable to take advantage of the deals these retailers have to
offer. With a prepaid card, shoppers can benefit from all of the discounts,
online sales and coupon offers that at one time had been available only to
those with credit cards.
In addition to allowing any consumer to take advantage
of online shopping deals, prepaid cards also save consumers money. Since cards
are funded by the user’s own money, it’s easy to set a realistic spending limit
that can keep budgets intact. Prepaid debit cards are also a great way to keep
kids on a budget, especially college kids who may need cash for books and other
expenses. Reloadable cards allow parents to put more money on the cards as
needed.
Unlike credit cards, there is no risk of over limit fees, returned check fees or overdraft fees that can accompany credit cards and
even check payments. Prepaid cards also don’t charge interest like credit
cards, which can result in substantial savings compared to consumers who carry
balances on credit cards.
Finally, many reloadable prepaid debit cards also
allow consumers to have their paychecks or government checks directly deposited
to their cards, offering an added level of convenience not available with
credit cards.
Overall, it is a useful and convenient addition to
every consumer’s financial plan, and offer conveniences and benefits even to
those who already carry traditional credit cards.
About the author:
Weston Terry is a consultant with UPside. He enjoys helping other
with their financial needs. He also enjoys hiking and traveling with his wife
and kids.
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