NDSU Extension - Ramsey County


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Debit or Prepaid?

Debit or Prepaid?


                Do you only feel comfortable spending money you know you have? If so, you are probably among the growing number of Americans who use debit or pre-paid cards.  With debit cards, when you make purchases, it withdraws funds directly from your checking account, so you cannot spend more than you have.

                If you are using a debit card, keep in mind the following smart practices.

  • Always know your current bank account balance and available funds.
  • Know your daily cash withdrawal and spending limits and contact your lender if you need to raise or lower amounts.
  • Use your debit card to get cash back when making purchases, to avoid ATM fees.
  • Receive free, automatic alerts to protect your account if:
  • ATM withdrawals or any debit card activity exceed your set dollar limits.
  • Your online ID or passwords change.
  • Large transactions are made.

  • If you plan on using your debit card across state and international lines, let your bank know ahead of time, to prevent fraud or security alerts.

                How Prepaid Cards Work

                Unlike debit cards, prepaid cards are not tied to a bank account. When you make a purchase with a prepaid card, the amount is subtracted from the balance of the card. Here’s what you can do with it:

  • Make purchases in person, online or by phone
  • Reload the card with additional funds
  • Withdraw cash from an ATM or bank
  • Receive wages or funds by direct deposit to the card
  • Pay bills

                Prepaid cards can be a great way to help you gain experience budgeting, using ATMs and making purchases. Because you aren’t given a line of credit, you can’t overdraw from your account.

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