Are there any advantages to using a pre-paid debit card rather than a traditional debit card associated with a checking account?
Maybe. A pre-paid debit card offers many of the same advantages you get with a regular debit card. If the card is lost or stolen, it could be replaced free of charge. You can use most pre-paid debit cards anywhere a traditional debit card is accepted. You may even be able to have checks directly deposited to your pre-paid card, cutting out the hassle of waiting on a check in the mail.
However, several real differences do exist. Unlike a traditional debit card, which is normally free of charge with a checking account, most pre-paid cards do charge a fee to load the money onto the card. However, pre-paid debit cards do not allow you to "overdraw." If you have trouble balancing your checking account and often incur overdraft charges, then a pre-paid card might be the route to take.
Additionally, if you cannot open a checking account for whatever reason, then a pre-paid debit card would also work for you. The purchase of a pre-paid card does not require credit checks, checking accounts, or employment.
However, if you choose to use the pre-paid cards, a number of drawbacks exist. When loading money onto the card, you need to use a money order or cashier's check, so the transaction can be tracked. Keep in mind that a waiting period may exist from the time you deposit the money onto the card and the time when the balance becomes available.
Additionally, if you attempt to make a purchase and you do not have the pre-paid balance to cover the transaction, the request will be denied. With a traditional debit card, banks may approve transactions when you do not have the money in your account up to a certain limit. Although this may lead to overdraft charges, occasionally it might help you avoid embarrassment or, in some instances, an emergency.
A checking account and an associated debit card are almost always your best choice. You often have the convenience associated with a local branch, and if a problem arises, you can visit the bank and talk to someone in person. However, if a checking account is out of your reach or if you simply would accrue too many overdraft charges with a traditional debit card, you should probably consider a pre-paid card.
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Maybe. A pre-paid debit card offers many of the same advantages you get with a regular debit card. If the card is lost or stolen, it could be replaced free of charge. You can use most pre-paid debit cards anywhere a traditional debit card is accepted. You may even be able to have checks directly deposited to your pre-paid card, cutting out the hassle of waiting on a check in the mail.