While prepaid debit cards can be an easy way to get a teenager started on debit, spend money when abroad, and allocate funds for specific expenses, they also have their drawbacks. These cards are often marketed to people who don’t have checking accounts or can’t open a credit card line.
These debit cards pre-loaded with funds and cannot be over-drafted. They provide many benefits but do cost something to use them. It is best to look into specific cards and see if prepaid debit is right for you.
Prepaid debit can be very helpful, they have many of the same benefits credit and debit cards have but also have some fundamental differences. Not only are they imperfect, prepaid cards can cost you if you’re not careful.
Read the Fine Print for Fees
One of the most important things you can do to avoid problems with prepaid debit cards is to actually read the fine print. We have gotten so used to skimming terms and conditions or, worse, not reading them at all. If you read the fine print you will learn that some cards charge a monthly fee that could dig into your balance.
Some cards charge you to withdraw cash from an ATM. Others have fees for dormant cards. Most have fees to activate the card. There are many different ways that prepaid debit cards can get in charges quietly. But according to the experts at the site MoneyPug, which is used to compare prepaid cards, you don’t have to settle for a card with many fees. There are many options, you can find the right card that works for you without costing an arm and a leg.
Monitor Card Activity
Prepaid cards don’t issue statements automatically like debit and credit cards do. You have to keep track of purchases and the balance yourself. It is typically possible to register the card through the issuers’ website and view your card activity online. But be careful. Some cards even charge to check the balance. You should avoid this. There is no reason you should have to pay to monitor your own activity. It is no always clear how much you will be charged for certain activities. Read the fine print and ask many questions before you sign up.
Pay Attention to Chargebacks
While prepaid debit cards are accepted at most places, there are some retailers who choose not to take them. Even if they appear to work at the time or purchase, the charge may be declined later. This could cause you some problems and lead to retailers pursuing you for money that you already paid them. When you monitoring your card activity, always keep this mind.
Keep the Card Close
Losing a prepaid debit card can come with many headaches. The vast majority of card companies will charge you to replace it, and they vary on how much they will charge. It would also be easy for someone who found the card to use the remaining balance. Since prepaid cards don’t always have the same protections as debit and credit, you are less likely to get your money back. It’s crucial to read the terms and conditions to understand the policy on this. When you know what you are liable for, you will keep the card close and understand what you will need to do should you lose it.
Cancelling the Service
There may also be fees for cancelling the prepaid card service. It is important to buy only things you won’t return before you cancel the card, you don’t want any of your charges to be affected by the cancellation. You should also know how much is on the card and spend the rest of the money on it carefully. You could also withdraw the balance as cash or close the card and request a refund in the form of a check.
Prepaid debit cards can be quite helpful, but you definitely want to understand what you are getting into before you sign up. When you read the fine print and understand the drawbacks of your card, you will be much more equipped to use it intelligently. Don’t be lazy and forget to read the fine print. It will likely cost you. Take advantage of the materials at your disposal and you will be able to use a prepaid debit card successfully.