• Increase font size
  • Default font size
  • Decrease font size
Home Banking News Prepaid Cards Go Mainstream

Prepaid Cards Go Mainstream

E-mail Print PDF

Once banished to birthday gifts and rebuilding credit, prepaid debit and credit cards are building a growing fan base. Consumers irritated by bank fees are turning to prepaid debit cards as an alternative method of payment. Others are choosing to forego bank accounts all together and only use prepaid cards. Parents of teens have started doling out cash on prepaid debit cards instead of handing over cash or mom and dad’s credit.


Why Use A Prepaid Card?

While it might not be a good idea to bury all your cash in the backyard instead of having a bank account, pre paid cards do have their uses. New laws are in place which allow employers to issue prepaid debit cards in lieu of mailing a paper paycheck (if the employee does not opt in for direct deposit). State governments have been using prepaid cards for years as an efficient way to distribute social security benefits.

The FDIC estimates as many as 7.7% of Americans are unbanked, households which could benefit from the convenience of a prepaid card and avoid check cashing fees in the process. Prepaids tend to have all the conveniences of traditional debit or check cards, so there’s very little hassle involved with using them. They also tend to have fees, though not as exorbitant as those banks charge.


How Prepaid Debit Cards Work

Unlike a traditional bank card, prepaid cards aren’t linked or attached to a bank account. Customers load a card up with cash upon purchase, and can reload the card to make payments or purchases down the road.

While prepaid cards have traditionally been directed at people with poor credit, more people with good credit are using these cards as an alternative to avoid bank fees.  Proponents of prepaid cards also point out that they can be good tools for money management, like to curb overspending or assist in sticking to a budget.


Where to Find Them

Prepaid debit cards are offered by banks, financial institutions, and credit unions. A prepaid card can be used anywhere that a credit card can be used usually. Most prepaid cards have a Visa or MasterCard logo on the card. All merchants that accept major credit cards will also accept this type of card, similar to a traditional check card linked to a checking account. Account activity for a prepaid card can be tracked online for most issuers, just like a traditional debit card. Most cards also allow you to reload the card with cash online, too.


Potential Cons

While the prepaid debit card industry touts itself as a more consumer friendly option than bank cards, compare fees before you take the plunge. Check on minor details that could end up being big headaches, like residual balances and whether or not you can withdraw cash.


Top 10 Most Beautiful Currencies in the World

Login Form

What happens to my money if my bank closes down? What happens to my money?
What happens to my money if my bank closes down?
How International Banking Works How International Banking Works
What's really so special about these international banking opportunities?
10 Sneaky Banking Fees 10 Sneaky Banking Fees
Even though your bank offers a variety of convenient services, chances are they're not free and...

Bank Wire Transfer

Do I really need a bank account? Do I really need a bank account?
You may wonder whether you need all your money in the bank?
How Fraud Prevention Works? How Fraud Prevention Works?
Ever absentmindedly tossed out a credit card bill or checked your bank balance from a computer at the library?
cash, credit or debit? cash, credit or debit?
Is it best to shop with cash, credit or debit cards?
5 Ways to Spot a Hacked ATM 5 Ways to Spot a Hacked ATM
These days ATM skimming is as easy as it looks in the movies.But armed with some information, you should be able to spot a suspicious ATM when you see one...
We have 9 guests online
Is The Best Bank Always The Biggest?

Certificates of Deposit

How CDs Work? Certificates of Deposit (CD’s) are one of the safest investment vehicles out there. If you want to be at the low end of the risk/reward spectrum, CD’s might be the right choice...Read More