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It's a Credit Card? It's a Debit Card? It's a Prepaid Card!

It’s a Credit Card?  It’s a Debit Card? It’s a Prepaid Card!

                Prepaid cards are an alternative to traditional credit and debit cards. And because they usually bear familiar logos such as Visa, MasterCard, or Discover, they are often indistinguishable from those other cards at first glance. But much of the similarity ends there.

                Like a debit card, a prepaid card can generally be used to make purchases in stores and online, receive direct deposits, pay bills online, and obtain cash at an ATM. But prepaid cards don't require you to have a bank account--you can buy them in stores or online. Without the link to an existing bank account, prepaid cards lack the guaranteed protections we take for granted with debit and credit cards, including what happens if your card is lost, stolen, or used for unauthorized transactions, or if the bank behind it fails.

                Pre-paid cards often have a multitude of fees – most of which are deep within the small print of the many pages of info you often need to locate online.  Among the fees to compare if you're considering a prepaid card:

 

  • Activation or initiation fees
  • Monthly fees
  • Point-of-sale transaction fees
  • Cash-withdrawal fees
  • Balance-inquiry fees
  • Fees to receive a paper statement
  • Fees to call customer service
  • Bill-payment fees
  • Fees to add, or "load," funds
  • Dormancy fees for not using your card
  • Fees to get your remaining funds back when closing the account
  • Overdraft, or "shortage," fees
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                    With some cards, you might be able to reduce fees by using direct deposit to load money onto the card. And you can avoid non-network ATM charges by getting cash back when making purchases and checking your balance online or over the phone.

                    The major advantage of a prepaid card is that you can easily keep track of your spending and limit yourself to a certain level of spending each month. Also, you don't have to pay interest and don't have to go through credit checks to get one. All of the funds on the card are completely controlled by the amount of money you wish to put on it. This means there is no risk of borrowing too much and going into debt.

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