Prepaid debit cards have generally been viewed as an alternative for those without a traditional bank account. While many of the unbanked—which refers to individuals who do not have a traditional bank account—use prepaid debit cards, many others have found them to be useful, as well. The finding is evidenced by data from a study conducted by the Federal Reserve Bank that showed prepaid cards were the fastest-growing electronic payment method during the period from 2006 to 2012.
Prepaid debit cards are popular among consumers because they are straightforward, simply requiring that consumers load funds onto their cards either in person or online. Millions of Americans use some form of prepaid debit card, and the benefits go beyond convenience. Here, we explore some of the top ways that budget-savvy consumers can use their prepaid debit cards to save money.
Be Smart about Loading Your Card
The fact that you can reload a prepaid debit card when cash is running low makes it a convenient option. However, in their efforts to save money, consumers who are on a budget should be mindful about when and how they choose to reload their cards. Many prepaid debit cards offer consumers the option to reload by using direct deposit or visiting an authorized retailer.
Of the reloading options, direct deposit is the safest and most cost-effective method available. Setting up direct deposit for a prepaid debit card is simple, and the process can easily be undertaken through an employer, who also benefits because it eliminates the expense of paper checks. In addition, most prepaid card issuers allow consumers to access these funds free of charge. For those individuals who are on a budget, the ability to load funds on a debit card without worrying about fees saves both money and time, since there are no additional steps necessary to load cash onto your card.
Using direct deposit is not the only way to save on reloading fees. Some prepaid debit cards also allow person-to-person payments. To find out the most beneficial way to reload your card, consumers should make a point of visiting the card issuer’s website for detailed information about how to minimize reloading fees.
Use Your Prepaid Debit Card While Traveling
Consumers who travel frequently have become particularly fond of prepaid debit cards, and for good reason. When you are attempting to stick to a budget, using a prepaid card is one of the best ways to stay on track. You can simply load your funds onto the prepaid card, ensuring that it matches the currency of your destination. Then you are on your way. Since travelers can use their prepaid debit cards at businesses that accept major credit cards, they are ideal for tracking travel spending. Loading your funds onto a prepaid card can help you to avoid impulse purchases and stay within your budget. Prepaid debit cards can even be a helpful way for your children to limit their spending. You can give each of them a prepaid card with a predetermined budget. A prepaid debit card can also help children to learn the value of money.
Besides helping you to stay on budget, using a prepaid debit card while you are on vacation is much safer than carrying cash or using travelers’ checks. Travelers do not need to bring cash that could be stolen. In the event that travelers need to reload their prepaid debit cards while abroad, it is easy to do so online in a fast and secure manner.
A Prepaid Debit Card Can Help You Stay Within Your Budget
Moreover, prepaid debit cards can prove beneficial for those consumers with a traditional bank account who have a tendency to overdraw their accounts and face high fees. Since prepaid debit cards are loaded only with the amount that consumers wish to spend, there is no risk of overdraft charges. As a result, consumers can learn to budget their money and spend it more wisely.
When it comes to paying your bills, a prepaid debit card is a great way to save both money and time. You can use a prepaid debit card to pay your bills by phone or online rather than by mail, which will save you money be eliminating the expense of paper checks, stamps, and envelopes.
Historically, prepaid cards have been viewed as a financial instrument that was mostly used by the unbanked and underbanked—individuals who have bank accounts but limited access to financial services. However, in recent years, the perception of prepaid debit cards has changed for the better, and consumers are beginning to realize just how beneficial they are. By following these tips and understanding the features of prepaid debit cards, you can save money while enjoying all the benefits that it has to offer.
