With a regular debit card , the amount of money you can spend is tied to how much you have in the checking account it is linked to.
So you need to have a bank account to use a regular debit card, while you don't with a prepaid debit card. With a regular debit card, the amount of money you have available to you will also fluctuate from day to day, as money moves in and out of your checking account.
With a prepaid debit card, you have a fixed amount of money to spend, which declines as you spend it and rises only if you reload the card. Prepaid debit cards can come with an assortment of fees that will eat into your cash balance.
These may include monthly fees, transaction fees, ATM fees, reloading fees, foreign transaction fees, and more. You may even be charged a fee for checking your balance in the card. Employees have a legal right to decline being paid through a payroll card because the fees will reduce their take-home pay. If you're shopping for a prepaid debt card , pay particular attention to its fees. Also consider convenience. For example, if the card is free to use at an ATM as many of the best cards are , how large an ATM network will you have access to, and is there one close to where you live or work?
If your goal is to repair your credit rating, consider a secured credit card instead of a prepaid debit card. If the reason you want a prepaid debit card is that you have a bad credit history or no credit history and are unable to get a conventional credit card, you might consider a secured credit card instead.
Secured cards are easier to qualify for because they require you to put down a refundable security deposit that serves as collateral for the lender. The advantage of a secured credit card is that your monthly payments can be reported to the three major credit bureaus and help build your credit history. Debit cards, either prepaid or the regular kind, don't report transactions to the credit bureaus and will do nothing to improve your credit.
Consumer Financial Protection Bureau. Credit Cards. Some card issuers require you to register your prepaid card with personal information like your name, address and Social Security number. This adds a layer of security for accessing features like reloading the card or using an ATM.
Once the card is fully activated, you can use your prepaid debit card much like any other credit or debit card. You can generally swipe or use the EMV chip of your prepaid card at any location that accepts debit cards. There are several ways you can choose to reload a prepaid debit card with more money — online, by direct deposit, with mobile check deposit or at certain retail locations or bank branches.
Again, some cards may charge fees depending on how you choose to add money, so be sure to check with your provider to find the best way. A prepaid Visa debit card is a card that is preloaded with a set amount of money. You can use it to pay bills, withdraw cash or make purchases. Prepaid Visa debit cards come from a variety of issuers — like Green Dot and Walmart, as well as certain banks and credit unions — but all are connected to the Visa network and accepted wherever Visa debit cards can be used.
Prepaid Visa debit cards come from a variety of issuers, ranging from financial technology companies like Green Dot and Netspend to traditional banks and credit unions. Some issuers may sell their prepaid cards online or at retailers like drug stores and grocery stores. The popularity of prepaid cards is due in part to their versatility.
You can use prepaid cards to book a hotel room or rent a car. And they even come with account and routing numbers, which means you can have your paycheck direct-deposited onto your card. Prepaid cards were originally designed for people with poor credit or nonexistent credit history , and they remain an excellent option for those with credit issues. A prepaid card will not require a credit check but neither will it help you build credit since spending on prepaid cards is not tracked by credit bureaus.
The study went on to highlight the discrepancies that exist in the groups that use prepaid cards. When choosing a prepaid card, look for a card that fits your specific needs. For instance, some prepaid cards let you pay bills online, and even up automatic monthly payments. Some will issue payments via electronic check issued by the card company or let you withdraw cash from an ATM using a special PIN. Managing your prepaid card is easier than ever with online account access.
A reload card works like a gift card: It contains a code number that becomes linked to the amount of money you paid the cashier. Using reload cards with a PIN was a popular and convenient way to load a prepaid card online or over the phone — until PINs became a target for scammers.
Instead, you will find fees, and they often will be hidden. Unlike credit cards, which by law must disclose their terms and conditions upfront, no regulation forces pre-purchase disclosure of fees on prepaid cards. According to the Consumer Financial Protection Bureau , some of the common fees associated with prepaid cards include monthly fees, transaction fees, inactivity fees and even fees for paying bills — the list goes on and on.
Prepaid cards can charge fees for everything from setup to reloading. The good news is that by comparison shopping, consumers can limit fees, as long as you keep a minimum balance or sign up for direct deposit.
Some cards charge for special benefits such as overseas use or automated bill pay, and most tap you for out-of-network ATM withdrawals. The prepaid industry has expanded in recent years, and consumers have many options to choose from.
These include prepaid cards with benefits aimed at specific lifestyles. Even for people with a regular bank account, a prepaid card can be an effective budgeting tool. If not, you can submit a complaint on the CFPB website. Other features: Some prepaid cards offer check writing, online bill pay and multiple copies of a card for family members.
A rare few even offer rewards such as cash back on purchases, similar to rewards credit cards. Read more about the basics of debit cards. Recent horror stories: Several prepaid cards have been affected by technological outages that lasted days or weeks. The Walmart MoneyCard experienced an outage in Netspend settled with a federal regulator over claims that customers were blocked from accessing their accounts, providing refunds to those who were eligible. If you want a checking account without monthly fees, consider our list of best free checking accounts.
There are also second chance checking accounts for people with bad credit or banking histories. Whether used as a budgeting tool or as an alternative way to bank, prepaid debit cards can help you store and spend money productively. What is a prepaid debit card and how do I get one? A savings account is a place where you can store money securely while earning interest.
Learn More. LendingClub High-Yield Savings. APY 0. Discover Bank Online Savings. Cash management accounts are typically offered by non-bank financial institutions.
Wealthfront Cash Account. CDs certificate of deposit are a type of savings account with a fixed rate and term, and usually have higher interest rates than regular savings accounts.
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