Pros and Cons on Prepaid Debit Cards
Prepaid debit cards started to take off in the 1990’s when financial companies came to realize that many people could not qualify for credit cards. (Little did many people know that credit card processing services fees could end up evening out the bill.) They realized this was a way to still accommodate someone with bad credit, so they would be able to have a credit card/debit card on hand. Many people who were applying for credit cards and were accepted were later having difficulty paying off the credit card. This often led to substantial outstanding balances and it caused many people to file for bankruptcy. The financial district was in need to secure the credit card market, and this is when they came up with the prepaid credit card system. You deposit money into a prepaid credit/debit card and you can only use what you have on the card.
The prepaid debit card system had its faults, they went through different variations of how a customer would deposit money into a card, and how much they could take out and or use. They later came up with the prepaid debit card system that allowed customers to place direct funds into a Visa or MasterCard prepaid debit card through either an online banking system or merchant location. This product worked exactly like a prepaid phone card, you convert paper currency into a plastic card. A prepaid debit card line would always have the amount you deposited in use, and you would be able to purchase items or withdraw from an ATM.
The Pros of having a prepaid debit card star off with the main fact that you cannot go over your balance on the card. This ability will allow customers to purchase items without spending what they do not have in the account. Another pro is that you do not have to worry about paying a credit card company back, or having a high interest rate attached to what you spend. Whether you have good or bad credit or no credit at all, at 18 years old you can apply and be accepted to have a prepaid debit card which will allow you to reload any amount of money online, over the phone or at any ATM onto your card.
The Cons are that you do not have the opportunity to use a credit card bank fund for the twenty-five days. Also, if the card is lost or stolen, Visa and MasterCard have a stricter policy on reporting the card, rather than if you had a credit card.
Overall the pros of having a prepaid debit card seem to far outweigh the cons. If you do not have perfect credit, or you do not know how to balance your account, a prepaid debit card is a great option to look for.