Prepaid Credit Debit Card : The Benefits, The Downside

By: EconomyWatch Content Team   Date: 2 February 2010

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In recent years customers have started turning their attention to prepaid cards as opposed to a traditional credit card. This tends to be for a variety of reasons, but there are certain benefits of having a prepaid credit debit card that seem to come up again and again. Of course prepaid cards are not right for every consumer and since they require upfront cash before they can be used some may find it difficult to obtain one. But this simple guide to the benefits of using them can give you an idea if this is the right thing for you.

One of the biggest benefits to a prepaid credit debit card is that they are perfect for students or someone who cannot obtain a traditional credit card, like those on a fixed income. These cards are a very easy and convenient way to have access to your money but also to give a student a limit on what they can spend. With a traditional debit or credit card, it can be very easy to overspend and get yourself into trouble.

As a college student that can wreck havoc on your financial future for a long time afterward and is something that should be avoided. But it is much easier to set yourself a limit and load the prepaid card with that amount and know that is what you have for the week or month. And because there is no credit history check associated with the card, even those whose credit is not that great can have the benefits of using a card without the hassle of qualifying for one.

Like with a credit or debit card carrying a prepaid credit debit card is much safer than carrying around cash. If someone steals your wallet and finds cash, there is no safeguard in place to help you get that money back it will simply just be gone. But with a prepaid card, you are protected from fraud in the event that your card is stolen or goes missing. You can cancel the card before anything fraudulent takes place, or dispute any unauthorized transactions that do take place. 

Getting a prepaid card can also help you to manage a budget if you find money running short at the end of the month. For example, most people are prone to buying a few impulse items when they go to the grocery store. It doesn’t seem like much at the time, but after a few shopping trips that can put a dent in anyone’s budget. But because the prepaid card isn’t a credit or debit card, it will not allow you to make purchases that overdraft the account. So if your card only has $100 for the groceries on it, then $100 is all you have and those impulse buys will seem a lot less attracting and keep you within your budget.

 

 


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