Updated November 27, 2013

Prepaid Card Secrets

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If you ever dreaded the day when you would find yourself pulling one those prepaid debit cards out of your wallet, we have a secret to share with you: Prepaid debit cards are now hip! Millions of people are uncovering prepaid debit card -- that have suddenly made them one of the most popular tools in the financial shed.

Until recently, they were the option of last resort for people who couldn't obtain a regular credit card due to poor credit. They were considered to be expensive, with high activation and transaction fees. They had no bells or whistles, and they weren't very convenient to use. The biggest secret that people are discovering is that prepaid cards have come a long way in what they offer, and they have entered the mainstream of personal finance. Once people learn all of the secrets of these cards, they find a number of ways to use them.

Prepaid Card Secrets Uncovered

Competitive fees: As more issuers enter the prepaid card market, the fees have become much more competitive with some offering low or no fee cards. It's always important to read the fine print because some types of transactions will trigger fees while others won't.

Savings feature: Some issuers are now linking their prepaid cards to a savings account that pays a competitive interest rate on balances.

Direct deposit and automatic transfers: Cash flow management is made easier with the ability to have your paycheck automatically deposited to a prepaid card account. Some cards allow you to set up an automatic transfer of funds from a checking or savings account.

Online banking: Today's prepaid cards are much more convenient as most come with access to an online account for managing balances, making payments, replenishing the card, and even bill paying.

Travel and warranty protection: Some prepaid cards come with the same kind of protections that credit cards offer for purchases and travel. Some travelers have taken to using prepaid cards in place of traveler's checks because they can actually be easier to replace than travelers checks and are just as widely accepted.

Join the Crowd

In the last few years prepaid debit cards have risen above the stigma that was once associated with them when they were only considered to be a credit card with training wheels. Now that frugality and financial common sense are in vogue, people are learning about the secrets of prepaid debit cards and the advantages they offer in money management. And, as the companies that offer the cards continue to improve their features and benefits, prepaid cards are garnering more attention from consumers and businesses.

  • Parents who want to control the spending habits of their kids attending college.
  • Parents who want to give their teens a structure to learn how to save and spend money.
  • Businesses that want better control of expense account spending.
  • Households that want to set up strict budget controls for discretionary spending
  • Anyone who wants to create a more efficient means of managing their cash flow.

Becoming Cashless and Credit less

Getting started on a prepaid card is very easy, and for people who are intent on freeing themselves of the bonds of their credit cards, the transition can be liberating. All you need to do is take a manageable lump sum of money, say $500, and imagine that you were paying off a credit card this month. This becomes your prepaid card balance. Then, instead of making payments to a credit card, you will be making payments to yourself.

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Comments about Prepaid Card Secrets

  • Linh from Texas
    on November 28, 2012 8:36 PM said:

    Would a prepaid card be better for a college than a credit card?

  • Charles Tran
    on November 29, 2012 8:58 AM said:

    For college students, it depends on their financial maturity. Check out our guide on http://www.creditdonkey.com/teenagers.html

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