Many new prepaid cards are entering the credit market.
Consumers should be aware that some of these cards come with high fees that are
not consumer friendly. However, not all of them have high fees and for some consumers,
prepaid cards may be a good fit for their financial needs.
Consumers considering prepaid cards should be prepared to
answer the following questions:
- How will funds be placed on the card? Many cards offer free fund loading through direct deposit, but charge a fee for cash deposits.
- How will the card be used? For example, how many purchases will be made with the card, how many ATM withdrawals, how many out of network ATM withdrawals? Will the card be used for online bill payments? Some cards may charge fees for these services.
Visit the following link to help determine if a prepaid card
would be beneficial for your financial situation: http://money.usnews.com/money/personal-finance/articles/2012/04/24/the-5-best-and-worst-prepaid-cards.
In addition, some prepaid cards may come with benefits that
may not be offered with a checking account or credit card, such as:
- In most cases, no credit check is required to use a debit card. The card can be used just like a credit card for purchases and to pay bills online without having to qualify for a credit card or a bank account.
- The best cards limit spending to what is deposited on the card. This teaches budgeting skills and eliminates worries over overdraft fees or late payment fees.
- Many cards offer online or phone access to reports that indicate where funds are being spent.
Prepaid cards are another credit vehicle that can be a
useful financial tool. As with any credit product, weigh the potential benefits
against the annual cost of the card to help determine if prepaid cards are a
good fit for you.
