With prepaid products, people can shop online without the fraud concerns typically associated with using credit cards on the Internet. Protect Funds. Carrying a card is safer than carrying cash and storing funds in a prepaid account is much safer than keeping a stash of bills at home. If lost or stolen, a reloadable prepaid card and the balance on the account can be replaced.
Track Spending. Unlike cash that can be spent mindlessly, electronic transactions can be reviewed and monitored so some people use these cards to give themselves a budget. For example, you might add a set dollar amount to your reloadable card each month to save for a family vacation then start using the card when the trip begins.
Handle Business Expenses. Small businesses are using these cards for budgeting as well. In lieu of the petty cash drawer, for example, the receptionist has a card that can be used for office supplies, parties and other non-recurring expenses. Sales people might get a prepaid card to pay for trips and an entire department might use a prepaid card to pay for subscription services, marketing promotions and so forth. In these examples, a prepaid card is more secure than cash, less risky than credit and cheaper to manage than processing expense reports.
Give an Allowance. Families often turn to prepaid products to give teens and college students an allowance for gas, groceries, books and other expenses. They can even be given as an emergency fund or as a tool for learning how to manage money responsibly before graduating to a bank account or credit card.
Limit Fees. Finally, some people just want to limit the fees paid each month. Because costs associated with using reloadable prepaid cards are disclosed in advance there are no surprise interest charges, late fees or overdraft charges tacked on during the month.
Although most reloadable prepaid cards work similarly, each has various fees and features associated with it. Here are some questions to think about before selecting a card:. How do you intend to use the reloadable prepaid card? Will it be your primary money management tool, a complement to your existing bank accounts or is it simply a way to give spending money to your kids?
The more you intend to use the card, the more likely you are to want access to the full range of features so it might be worth paying a higher monthly fee to get the individual services e. ATM Access, direct deposit, bill payment, etc. How many transactions do you anticipate making each month?
If you plan to use the card frequently, then a card that costs more but offers cash back rewards may ultimately save you money. If that financial institution fails, deposit insurance can step in so you don't lose any money. Reloadable debit card issuers are required to inform you about whether your money is insured before you buy their card. Some prepaid debit cards provide additional benefits. The Bluebird Card from American Express, for example, comes with features such as emergency assistance and fraud protection.
But that's not the case with every card, so it's helpful to look at what else you get before signing up. If you're shopping for a reloadable debit card, you may also want to consult Investopedia's list of The 5 Best Prepaid Debit Cards of When selecting a reloadable debit card, check to see if the card has an expiration date.
If it does, find out what you'll need to do be issued a new card so that you don't lose access to your balance.
There are several reasons someone might choose to use a reloadable debit card. The first is the convenience. For example, reloadable debit cards make it easier for a person who is currently unbanked or underbanked to conduct everyday transactions without carrying around a lot of cash. A prepaid card could also be a good fit for someone who needs help with overspending or learning how to keep track of their spending. For example, if you're a parent, then a teen debit card could be a helpful teaching tool to get kids used to tracking their expenses.
There are also no negative credit side effects with a prepaid debit card, since you aren't taking on any debt. The flip side of that, however, is that unlike a credit card you can't use a reloadable debit card or debit cards generally to build a positive credit history.
Regular debit cards linked to checking accounts come with certain protections in case your card is lost or stolen. Previously, prepaid debit cards did not enjoy those same protections, but new federal rules introduced in have changed that somewhat. According to Consumer Financial Protection Bureau guidelines, reloadable debit cards are now treated more like checking account debit cards. The key changes included:.
That last one is particularly important if you're concerned about losing your card balance if the card is stolen or used to make fraudulent purchases. If your card is lost or stolen, the CFPB advises contacting your card issuer right away to let it know. Waiting too long report unauthorized charges could cause you to miss out on the fraud protections that came with your card and cost you money. Department of the Treasury. Consumer Financial Protection Bureau. Credit Cards.
Personal Finance. Mobile-optimized banking accounts fit in this middle ground — like most prepaid debit cards, many have no credit check; unlike prepaid cards, many are linked to a bank account. Through the app, though, you can request that checks be mailed to a recipient, even yourself, for free. You can also open a linked Chime savings account and set up automatic transfers.
General fees and features: No monthly fee and no costs for activation or inactivity; no credit check. Cash withdrawal and third-party fees may apply. Purchases: No additional charge. Other services: Optional savings account. Chime has two automatic savings programs: one where a percentage of every paycheck automatically goes into the savings account and the other where your purchases are rounded up to the nearest dollar and the rounded-up change goes to savings see below for more information from Chime.
You can also receive instant transaction alerts and lock your debit card if you lose it. Note that a Chime Spending Account is required to open a savings account. Downsides: The out-of-network ATM fee. Chime says: "Round Ups automatically round up debit card purchases to the nearest dollar and transfers the round up from your Chime Spending Account to into your savings account. Monthly fee. We looked at 40 reloadable prepaid debit cards offered by some of the biggest banks, credit unions and prepaid debit card issuers.
Where multiple card plans existed, only the basic monthly fee plan was considered. We analyzed four categories for each card: general fees and features, purchases and withdrawals, reload fees and options, and other services such as bill pay and savings accounts.
The cards that made this list had the best combination of these categories. Some cards in this roundup have nonbank program managers that partner with banks. No cards above have overdraft fees. We also looked at three alternative, or non-traditional, accounts from financial institutions: Chime , GoBank , Moven.
What the ratings mean:. What are prepaid debit cards? Prepaid debit cards vs. Nerdy tip: If you need to build credit or have been denied a bank account, a prepaid debit card might not be the best option: Secured credit cards help build credit , and if you can't get a regular checking account, try second chance checking. These accounts provide another shot at mainstream banking and its perks. No monthly fees. Free ATM network. That is not true. The logos from the respective companies such as Visa, MasterCard, or American Express only show the issuer but do not indicate that the cards are similar.
A gift card is different from a prepaid card. You need to understand that a gift card is specifically for shopping at a particular store or stores. You cannot withdraw or send money using a gift card. Prepaid cards have the option of sending money, shopping at accepted points as well as withdrawing cash from ATM points.
You can use a prepaid card to buy a reloadable gift cards with no fees from merchants who sell them. Again, money loaded in prepaid cards does not expire. You can use it at any time you wish. Gift cards can expire. It means that when you receive one, you should use it within a specified time.
After that, the card becomes a mere plastic. Well, losing your prepaid card can be traumatizing. However, you need to worry less if at all nobody knew your PIN. However, you never know whether someone might have used tricky means to identify your PIN. Upon losing your card, you should report immediately to your service provider for deactivation.
You can then visit their offices in person and request a new card. Most prepaid card issuers charge you a replacement fee, which is usually small. Then transfer money from the old card into the new one. The most important thing is to be careful so that you do not lose your card.
Also, never tell anyone the PIN. In addition, you should never store your PIN notebook together with your card. It is even better to memorize the digits instead of having the PIN on a piece of paper. Most service providers allow you to use what you have on the card. Upon exhausting the previously loaded money, you then need to reload again to continue enjoying the service. Some companies allow you to recharge your card online while others require you to visit their offices physically.
However, there can be a specific agreement with your service provider to allow you to borrow money and pay later. That is possible if you have a good record of paying debts. There are so many credit and debit cards available these days.
Their various associated perks and rewards, finding the best reloadable prepaid debit cards with no fees, may seem like a fatiguing task. But we have presented some of the lists of card that we believe are any of the best options on the market.
For some states, prepaid debit cards can be a no-fuss way to cash paychecks and make a few bargains without dealing with bank accounts or credit cards. But even prepaid cards can come with an abundance of stinky fees. So, we have mentioned some of the most fee-free of the bunch in the following to help you find the right prepaid card.
Depending on the prepaid debit card you prefer, you may have several options for adding money that you can use for purchases.
Other methods of reloading a prepaid card include PayPal transfer, bank transfers using routing number and account number , and mobile check deposit. Including a prepaid debit card, you can choose a method of loading money on to a card like adding cash or direct deposit at a retailer and decide how much funds to count.
From there, you would use the menu to compose purchases online or in-store. Many cards also permit you to withdraw cash from an ATM, earn rewards, send money to friends, or set money away in savings accounts as well as you may not do all this with a bank account, making prepaid cards an excellent replacement for traditional banking. If you have been omitted from banks due to a bad banking history or tend to overspend and have poor credit, a prepaid debit card could be a fantastic money management tool.
That said, prepaid cards can be considered with your money management. For example, you can load a set amount of money onto your menu each week to help your budget.
Also, some cards enable you to add sub-accounts for a spouse or kids. Most prepaid cards have monthly fees, and some even charge you for loading cash onto the card at local retailers. There are numerous advantages of a free prepaid credit card; in the following, we mention the crucial benefits of the free prepaid card. A regular debit card is associated with a checking account at a bank or credit union. Some online stores offer debit cards as well.
On the other hand, a prepaid debit card is pre-loaded with money or funds from your paycheck or government advantages. With debit cards, if you opt into overdraft stability, you could face a substantial charge if a transaction gets declined.
After that, while prepaid cards are an outstanding budgeting tool, they typically come with more fees than a regular debit card.
A prepaid card is a standalone financial outcome that you load with money, and then it ultimately runs out of money unless you reload more. Neither is a credit card, which provides short term loans to the cardholder. A prepaid card can have a similar specification to a bank account; however, you can use it to deposit your paycheck or auto-debit bills. And this is because routing and account numbers can be selected to the card.
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