Is There Value in Prepaid Debit Cards?

This is a sponsored post. I have received compensation to write it and include links. However, I have intended to write this post for awhile and would have eventually. The opinions in this post are mine alone and have not been swayed in any way.

 

 

I’ve recently been considering the benefit of using a prepaid debit card on a regular basis. This idea came to me during the Financial Bloggers Conference. We were receiving a pitch from a few of our sponsors and one company was talking about payday loans. We all scoffed at this notion, obviously the majority of us see not value in them. However, this company also had a prepaid debit card.

During our discussions following this particular session, many of us discussed this particular company and the point I made on a number of occasions was that prepaid debit cards could be a valuable tool for someone who has trouble with managing money.

This may be a shock to you, I know, but I’m not that great with managing my money!

I’ve done a bit of research on prepaid debit cards to see if they may be useful to me. One particular card that I found was the Green Dot card. Their prepaid debit cards are found at many retailers such as CVS, Walgreen’s, your local grocery store and many other places (they can also be purchased online).

Reading up on their site showed me some positive benefits and negatives as well.

Benefits of a prepaid debit card

-It is a great way to manage your money. If you frequently take your account to a very low amount (I recently had mine down to just over $3.00) or bounce checks because you do a poor job of keeping a check register (like me!). This is a great option for you as you can not overdraw it.

-They are safe and secure for use with online purchases. If you have ever had your identity stolen, I can imagine this being a great relief to you. It also helps when you need to make an online purchase with a credit card but you don’t actually have credit cards anymore (again, ME!).

-There is no charge to purchase them if you do so online (in the stores the is $4.95) and when you order it online, it will have your name on it. In the stores, it will not.

-Using multiple cards would work if you were using the envelope system. I struggled with carrying multiple envelopes around due to the amount of cash I would have on my person. If you had a card for gas, one for dining out or any other category in your budget, this would be a great way to use them.

Negatives to a prepaid debit card

-There is a monthly service charge. In the case of the , it is $5.99 per month unless you use the card for more than 30 transactions (whoa, that’s a lot) or you load it with $1,000.00 or more. So many banks have accounts that are free, this could be an issue for you.

-If it is stolen and is not personalized (like it would be when you buy it online), your money is not protected.

My conclusion

I can definitely see the value in using prepaid debit cards in certain situations. I know many people are just not interested in banks or “being on the grid,” this would be a good way for them to have a debit card with the Visa logo. It would also be good if you can can’t stop overdrawing your account (and for the record, I have not done that in a couple of years).

It seems to be a popular option for many large companies who are using them for rebates. Even the federal government is testing prepaid debit cards for income tax returns.

I think for me, I’m not interested in paying $5.99 a month for this type of service. I can, however, see the value in it for some people.

 

I also blog at A Five Star Life. I write about anything that comes to mind but try to focus on finding the good in daily life.

Tags: debit cards, personal finance