A prepaid debit card lets you load a pre-deposited amount of money onto a card, so you can shop online or make in-store purchases — just like a credit card — until the money on the card is spent.
It’s a smart way to budget your money because when the amount on the card is spent, you’ve reached your budget limit.
Unlike a credit card, the main difference are:
- A prepaid debit card deducts funds from money you pre-deposit onto the card
- A credit card makes purchases on credit, which must eventually be repaid
If you want the convenience of a credit card but don’t have the credit to qualify for one, or you don’t want to incur debt or interest payments, a prepaid credit card is a smart alternative.
Why? Because prepaid debit cards:
1. Lets you earn cash back and are accepted anywhere
One of the main reasons people want to get a credit card is because of the rewards and cash back you can earn. The truth is, many prepaid debit cards offer the same benefit of earning cash back, rewards and discounts.
This makes them just as convenient as a credit card, plus it’s a whole lot safer than carrying around a wad of cash. If your prepaid debit card is associated with Visa or Mastercard, you will have all the convenience of getting cash out of an ATM, and being accepted worldwide at any place these major credit cards are accepted.
2. Can be safely and securely used online
One misconception about prepaid debit cards is that they aren’t as secure or safe to use when shopping online. This is not true. The prepaid debit card isn’t connected to your bank account so it’s like a built-in fraud protection, saving you from the identity theft that’s often connected to online shopping.
With prepaid debit cards, you won’t receive any bank statements, which is a much greener alternative. And again, this saves you from having your information available to people who want to steal your identity.
3. Help curb your spending instead of incurring debt
Once the money is loaded onto your prepaid debit card and you spend it, that’s it. You can’t do any more spending until you load the card again.
This makes it a great way to control your spending, instead of using a credit card that racks up debt. Prepaid debit cards are also a great option if you have poor or no credit, because these cards do not require a credit check.
4. Have much lower fees than credit cards
Credit cards come with a variety of fees, like over the limit fees, annual fees and high interest charges. Prepaid debit cards don’t come with any of these fees, because you’re only spending money you pre-loaded onto the card.
This means you’ll be able to save more of your money instead of spending it on fees and interest charges that come with credit cards.
5. Conveniently pay your monthly bills online
Prepaid debit cards can be used just like credit cards to make payments online for household bills like, electric, internet and other monthly expenses.
You can have the money automatically deposited onto your card with funds from your employer or add the funds directly online or over the phone. Then you can easily pay your bills on time without the worry of missing payments.
For these reasons, prepaid debit cards are just as safe, secure and convenient as using a credit card – and even more so because it keeps you from racking up unnecessary debt. Plus you won’t have to worry about paying off your credit card bill at the end of the month.
Do you agree? Is using a prepaid debit card a smart alternative to a credit card?