Prepaid debit cards are a smart and cost-effective alternative to carrying cash and paying check cashing fees. A good prepaid debit card can be better than a “traditional’ bank account in many ways.
Prepaid debit cards are not credit cards. Because prepaid debit cards are “pre-funded” (with the amount of money you deposit in the account related to the debit card), you only spend the money you have (so you won’t get over extended or run into credit problems). Even better, almost anyone can qualify for a prepaid card (there usually is no credit check required, and you don’t need to have an existing bank account). Use of the prepaid debit card is not reported to the credit bureaus because credit is not involved.
Prepaid debit cards are a great way for parents to give their teens money to spend while retaining control over how and where the cards are used. The card becomes a financial education tool; the teen has to learn how to budget the prepaid amount. Purchases are tracked online and are visible to parents. The cards are safer than cash; the bearer is protected against unauthorized purchases on lost or stolen cards. They provide security for both parent and teen.
The cards are easy to acquire – no credit required – and may be used everywhere the issuing agency is accepted. Visa, MasterCard, Discover all offer prepaid debit cards. They are also useable at ATM machines to obtain cash at a rate lower than commercial check cashing services.