Are Prepaid Debit Cards For You?
Prepaid debit cards are becoming a booming business as consumers tired of the high banking fees associated with checking accounts flock to the increasingly popular alternative to having bank accounts.
One great feature of a prepaid debit card is you can recharge when it when it runs out of money, so you don’t have to go through any type of process over and over again, other than that one.
The strength checking accounts in banks for some is a weakness for others; the reason the use of prepaid debit cards is growing so quickly.
For example, many banking customers like overdraft protection, because they have a handle on their finances, and they don’t want to go through the bother of being sure they’re covered to the penny if they do some spontaneous spending. So they understand they’ll have to pay for that privilege, and so don’t mind doing it.
On the other hand, those that don’t want to be hit with these fees can opt out of overdraft checking programs if they want, but then they have the issue of stopped payments if they run out of money. So they have to deal with taking care of that on the other side of the issue.
Depending on the lifestyle of consumers and the terms related to using an ATM, that can be an additional expense and headache, driving more people to go the prepaid debit card as their financial tool of choice. There are other elements connected to this, but you get the idea.
In a recent report titled “Prepaid Debit Cards: A Credible Alternative to Checking Accounts,” author Gwenn Bézard revealed that approximately 14 percent of those that now use checking accounts could save from $350 to over $1,800 by switching to a prepaid debit card.
Another interesting practice is people are moving from store cards to prepaid debit cards as well, saving more money because of no interest.
In another report, the savings aren’t near as significant as stated by the first report, as a Britton Woods prepaid debit card study found that savings for replacing a checking account with a prepaid credit card is between $96 and $146 annually.
The reason the figures are so far apart is the Britton Woods study only included basic debit card and checking account use, and didn’t include the numerous services which could add a lot of cost do using a bank checking account. That’s also the case with a prepaid debit card, which could have costs increase depending on what you used it for.
If you’re a good manager of your money and use basic banking checking account services, it’s probably not worth the time and effort to change. If you use a lot of bank checking services which generate a lot of costs and fees, then it could definitely be a good choice for you.
Some people even use both, designating certain types of spending on their prepaid debit card, ensuring they’re saving money by managing their checking account better through using it for specific items and bills.
I’m going to get a lot more into prepaid debit cards, but one nice feature to consider, is an answer to probably the first question in your mind, and that is how troublesome is it to get the card and get your money on it. The answer is it’s very simple, and all you have to do is have your pay check direct deposited into your prepaid debit card account. That will avoid any type of activation fees, while also being able to use them to make online transactions and other business.
Tags: Prepaid Debit Cards, saving money
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December 7th, 2009 at 8:28 pm
I used to work at Ruby Tuesday and our card was pretty bad. But, from what I hear, it was typical because most cards either have a monthly fee or pretty limited as to the free items. I have worked at Starbucks for about 7 months now and they allow us to have a card called the Money Manager Card. The choice was pretty simple because there are no monthly fees, I can use it on their network (allpoint atms) free at all times, never any fees to buy things (signing or using my PIN and getting cash back if I want…all without a fee or surcharge), no overdraft. Let’s just say I haven’t paid a fee in the entire time I’ve had the card. It’s pretty simple to use it at no charge and I really don’t have to tip-toe around any limited free items like most other cards I have seen have.
Oh, and don’t lose most payroll cards! If you do, it’ll cost you $$ even to get the replacement sent by the post office. My new card give free replacements when delivered by the post office all of the time. Or, if I want, I can get it delivered by Fedex for $10. Pretty reasonable as I sent something by Fedex a month ago and paid $14!
My point is, if you are a company and are going to get your employees something, don’t do what Ruby Tuesday did and get something that costs your employees $$$ to use it! I hated them for “giving” us that card…IMHO of course.
I should state that Walmart has something that is similar sounding to Money Manager Card. I think it is the Money Card or something like that. That card is definitely not the same.
I did a quick Google search on Money Card when investigating the Starbucks offering and mistakenly clicked on a link to a Money Card “problem” page where people complained about it. Then, I realized that “Money Card” is not “Money Manager Card”.