You may have noticed ads for pre-paid bank cards that function a bit like a debit card, a bit like a gift card and a bit like a credit card.
Banks claim these cards are ideal for the 17 million Americans who don’t have traditional checking accounts because they allow you to deposit money, make purchases anywhere Visa and/or Mastercard is accepted, pay bills, access your cash from an ATM, track spending online and more. You can even set up direct deposit through the card, so you can access your paycheck or government benefits like unemployment instantly.
Banks also tout the safety features of these cards. Most ads mention how the cards are a safer alternative to carrying cash, especially when traveling. They also emphasize that the cards are …show more content…
“If you’re in it, you can’t get a checking account until you improve your credit. A pre-paid card can be a temporary solution.”
If you are in the Chex system, don’t get too comfortable using pre-paid cards. A traditional checking account will be cheaper in the long run. “You can get out of the Chex system eventually, if you pay your bills on time,” Beverly says.
Banks also market pre-paid cards to parents who are trying to teach their children how to budget money. Beverly doesn’t buy it. “You could use it with a kid who has an allowance, but it’s best to open an account with your child and teach him or her how to use a debit card,” she says.
And what about the banks’ claims that pre-paid cards are safer to travel with? Don’t believe the hype. Granted, they’re safer than traveling with cash. But pre-paid cards have the same theft and loss protections as credit cards or debit cards. So if you have either of those, there’s no reason to invest in a pre-paid card.
What is the best pre-paid card?
If you decide to use a pre-paid card, read the fine print. There are always fees with pre-paid cards, but they vary greatly. Some cards waive fees if you carry a certain balance. Others give you a few, free transactions each
Banks claim these cards are ideal for the 17 million Americans who don’t have traditional checking accounts because they allow you to deposit money, make purchases anywhere Visa and/or Mastercard is accepted, pay bills, access your cash from an ATM, track spending online and more. You can even set up direct deposit through the card, so you can access your paycheck or government benefits like unemployment instantly.
Banks also tout the safety features of these cards. Most ads mention how the cards are a safer alternative to carrying cash, especially when traveling. They also emphasize that the cards are …show more content…
“If you’re in it, you can’t get a checking account until you improve your credit. A pre-paid card can be a temporary solution.”
If you are in the Chex system, don’t get too comfortable using pre-paid cards. A traditional checking account will be cheaper in the long run. “You can get out of the Chex system eventually, if you pay your bills on time,” Beverly says.
Banks also market pre-paid cards to parents who are trying to teach their children how to budget money. Beverly doesn’t buy it. “You could use it with a kid who has an allowance, but it’s best to open an account with your child and teach him or her how to use a debit card,” she says.
And what about the banks’ claims that pre-paid cards are safer to travel with? Don’t believe the hype. Granted, they’re safer than traveling with cash. But pre-paid cards have the same theft and loss protections as credit cards or debit cards. So if you have either of those, there’s no reason to invest in a pre-paid card.
What is the best pre-paid card?
If you decide to use a pre-paid card, read the fine print. There are always fees with pre-paid cards, but they vary greatly. Some cards waive fees if you carry a certain balance. Others give you a few, free transactions each