![]() ![]() If one of your big goals is boosting your credit score, you’re better off comparing the best secured credit cards. Neither prepaid debit cards nor traditional debit cards factor into your credit reports. If you’re hoping to establish a track record of responsible financial behavior, prepaid cards aren’t going to help your credit score. In many cases, you’ll have to pay a convenience fee to add money to your card. If you’re loading physical cash to your card, you’ll likely need to go to an affiliated bank or a retailer to have them load the amount onto your card. ![]() You can typically deposit checks at ATMs or through the card’s mobile app. If you can’t set up a direct deposit to your prepaid debit card, adding funds to it can potentially be a bit of a pain. Potential inconvenience of reloading the card Some banks and credit unions offer these accounts specifically for people who had past trouble managing their funds. If these fees sound especially frustrating and you don’t have the option to open a free checking account, consider looking at second-chance checking accounts. Be sure to understand the terms and fee structure before purchasing a card. For example, if you’re paying a $6.95 monthly fee and reloading the card twice each month, incurring a $3.95 fee each time, that adds up to more than $178 every year just to use the card. Some prepaid debit cards have been notorious for tacking on extra charges, and they can add up quickly. Monthly service fees, reloading fees, ATM fees, inactivity fees, transaction fees, balance inquiry fees - the list goes on. While prepaid cards can help you navigate an increasingly cashless world, there are some downsides to consider. These protections are typically available so long as you register the card in your name on the card’s site. This also makes prepaid cards safer than carrying a lot of physical cash.Īdditionally, money on a prepaid debit card typically falls under FDIC protection, which covers up to $250,000 if the bank that holds the funds fails. Prepaid debit cards are covered in the Electronic Funds Transfer Act, which means you can qualify for fraud protection if a thief steals the card or hacks the account number. In either case, a prepaid card could be a good solution for helping you make payments and manage your money. If you have a history of poor banking management - unpaid overdraft fees, for example - you might face some challenges getting a bank to approve your application for a checking account. Prepaid cards offer many of the same conveniences as credit cards without the risk of accumulating credit card debt. (Some prepaid cards offer overdraft protection, but it’s wise to decline this option since it typically means additional fees.) Loads of people struggle with the temptation to spend more than they have. If your card’s balance can’t cover the cost, you can’t make the purchase. Prepaid cards can provide a helpful guardrail for your cash flow. Prepaid cards can offer plenty of benefits as a money management tool. As long as the merchant is part of the payment processing network - usually Visa, Mastercard, Discover or American Express - you can use the card to make the purchase. ![]() When it comes to paying for purchases, you can use a prepaid debit card similar to the way you’d use a credit card or a debit card linked to a bank or credit union account. ![]() Adding money can happen in a lot of ways, including via direct deposit from an employer, an ACH transfer from another bank account, a transfer from a payment app like PayPal or Zelle, and adding money in person at a retail store or an ATM. A prepaid debit card is also known as a general purpose reloadable card, which means you can use it for most purchases and reload it with more money. ![]()
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