Are Prepaid Cards Right for You?

Posted on 07/22/2011

The prepaid debit card industry is booming. Americans spent $140 billion with prepaid cards back in 2009, which is the most recent data available from the Federal Reserve. According to research firm Mercator Advisory Group, the amount of money loaded on to prepaid debit cards is expected to reach $552 billion in 2012, which is a huge jump from the $330 million on these cards just three years ago. But is this type of plastic right for you? It depends on your needs and financial situation.

Are You Trying to Get Out of Debt? If you want to stop the bad habit of spending more than you have, then a prepaid debit card may be the way to go. It works like a credit card with one big exception—you can’t spend money you don’t have. Once the prepaid debt card reaches a $0 balance, you have to load it up with additional cash in order to spend more.

Do You Have Bad Credit? If you have less-than perfect credit, prepaid debit cards may help. Many people saw their credit scores plummet during the recession and they may not be able to get a credit card with a decent APR. A prepaid debit card allows you to pay with plastic without having to go through a credit check to secure one.

Do You Have a Bank Account? If you don’t have a bank account, a prepaid debit card can be a way for you to use a cash machine, set up direct deposit and do other financial activities that once required a bank account.

Are You Tired of Checking Account Fees? Plenty of banks and financial institutions are tacking on extra fees to their customers. Some accountholders fed up with this disturbing trend are closing their accounts and opting instead for prepaid debit cards. But beware; some prepaid debit cards have their own set of pesky fees.

Is Security a Concern? If you typically use cash, but are worried about it being stolen, then a prepaid debit card may be a good option. With the MasterCard Prepaid card, if it’s stolen you can recover your money, which isn’t an option with cash.

By Alison Storm

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Posted on 11.04.11 at 7:27 PM

This makes everything so cmoptleely painless.

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