How to safely and effectively use a prepaid debit card

May 16, 2018
Prepaid debit cards can be a significant financial tool, especially for people who do not have a standard checking account. These cards can give you many of the same advantages as a debit card tied to a bank account, but you should be aware of a couple of potential issues.
How to safely and effectively use a prepaid debit card

First of all, prepaid debit cards often come with fees. Some of these fees may be unavoidable, but if you have the right plan, you can limit these costs or do away with them altogether. Secondly, prepaid debit cards may not be as secure as credit cards or traditional bank-issued debit cards.
 
Here is what you should know if you want to safely and effectively use a prepaid debit card.

Avoid as many fees as possible

The first step is to find out all the fees that are associated with a given prepaid debit card. These extra expenses can vary from card to card. Some cards will charge you to load money. Others will charge a fee for ATM access. Charges could also levied for contacting customer service, inactivity, direct deposit, or generic monthly “maintenance.”

The next question you need to ask is “can I get around these fees?” Some cards may charge a single monthly maintenance fee, but they will waive fees for ATMs and other things if you either set up direct deposit or use the card a certain number of times each month. Before you get a prepaid card, you should realistically see if you can meet these requirements each month. If you can, then this could be a good option for you.

Security

Security is the other issue to think about with a prepaid debit card.

If possible, get a card that is protected by a pin number. This will mean that no one can use the card without knowing the pin number. If you lose your card or if someone steals it, they will have a harder time getting to your money.

That said, it is easier for thieves to steal and use prepaid debit cards because they lack the fraud protections of other debit or credit cards. You should plan to monitor your card reguarily for charges that you don’t recognize. This means that you should only consider prepaid cards that let you check your balance or monitor your account online for free (or as part of a single monthly fee).

Prepaid debit cards can be a great way to control spending. You should only load the minimum necessary amount on such a card. That way, if you lose the card or are a victim of fraud, you will only lose the minimum amount of money.
 

What if you need to borrow money?

An online personal loan can be a convenient way to borrow money if you need to make a significant purchase or if you only need some help covering your bills for a month or two. You can apply for these loans online with just a pay stub and bank statement. You do not usually have to undergo a complete credit check. The approval process could take a day or less. Regardless of whether you choose a prepaid debit card or a standard bank account, online personal loans are the easiest way to get money when you need it.