American Express, once known as a yuppie status symbol, introduced a prepaid debit card this week with hopes of reaching a new demographic. Prepaid debit cards were once considered a financial tool for the lower tier of consumers, but not so much anymore. Many people have made the decision to make life simple and do most (if not all) of their financial transactions using a prepaid debit card.
Prepaid debit cards are reloadable cards that can be used anywhere that major credit cards are accepted. They are also convenient to use for using to making online purchases. They are generally available without a credit check and do not require that you maintain any bank account. While a prepaid debit card can generally be used for any purchase, some rental car firms will not accept them so it is a good idea to ask about this if you plan on renting a car.
Prepaid Debit Cards – The Controversy
Critics of prepaid debit cards are concerned about some that charge high fees. What I have found is that there are a wide variety of options and many of these cards have very reasonable fees. While there is no free lunch, the competition among prepaid debit cards has become sufficient enough to have brought the fees down over the last couple of years.
One Of The Big Reasons That Prepaid Debit Cards Have Risen In Popularity
In recent years, banks have gone from greedy to downright ruthless in their dealings with customers. Shenanigans such as clearing checks in the order most likely to trigger bounced checks, assessing debit card overdraft fees of $35 for the purchase of a $2 soda, and skyrocketing ATM fees have all led to a population that is simply fed up with banks. Currently more than 17 million American adults don’t have bank accounts. That number is likely to grow as bank fees are expected to continue to rise.
In my own household, we have not written a check in nearly five years. We pay for everything using either a debit card, cash, or a money order. We simply decided that dealing with paper checks was too much of a hassle. We still do maintain a bank account, but find ourselves using it less and less.
Prepaid Cards Can Keep You From Overspending
These cards have become a very popular way to stay on a budget for many families. Remember, you can only spend the amount that is on the card and there is no chance that you will go above the amount you have deposited on the card. Many families are also using these cards to mange the spending of teenagers and college students in the family as well.
The Easy Lifestyle Of Using A Debit Card
Most debit card issuers allow you to have your paycheck (or Social Security check) automatically deposited to your account for free. You then gain instant access to the funds by using your prepaid debit card at the store or by withdrawing cash at an ATM. The best way to get cash is to select the ‘cash back’ option when using the card at a local grocery store. A prepaid debit card will not exempt you from the high priced world of ATM fees, although some are offering a limited number of free ATM withdrawals.
Prepaid Debit Card Options
There are quite a lot of choices within the world of prepaid debit cards; rather than trying to address this here, I have found a great resource page over at CreditCard.com that will provide you with everything you need to know to make a decision.
I am very interested in your own experience using Prepaid Debit cards. Please use the comment section below to share your thoughts. The best comment this week will receive a $50 credit to use at the Jim Paris Online Bookstore.
Helping you make the most of God’s money!