Since this is a new blog, it is probably best to start with the definition of prepaid debit cards. Generally, prepaid cards are debit cards that are issued by banks that act like a credit card but there is no credit extended. Unlike credit cards, prepaid debit cards require the card owner to deposit money onto the card before they can use it. You can fund the card at the time of purchase, or you can load money onto it via the funding options provided by the issuing bank. American Express, Discover, Visa and MasterCard all have prepaid debits. For example, Visa Prepaids, which are the most popular are issued in various denominations and can be purchased at retail locations across the country, including grocery stores, pharmacies, convenience stores like 7-Eleven, Wawa, Sheetz, at department stores like Walmart, Target, Home Depot, Lowe’s and many more. You can also buy them online.
There are two kinds of prepaid cards – reloadable and non-reloadable. The reloadable cards, as the name suggests, can be reloaded once the original amount you put on it is spent. This allows you to be able to use the card for everyday expenses or miscellaneous expenses that you don’t want to put on your credit card. Other people like to use this as a way to control spending for their kids in college or high school, since they can set an autopay transaction that moves money from their checking account to the kid’s prepaid debit card account. And since the card can be used for purchases, shop online and pay bills, it is a perfect allowance tool for parents to use for their teenagers and kids in college.
The non-reloadable card behaves in the opposite way. You cannot add money to it once the original amount is used up. That is why if you plan to use the prepaid card for a good while, it is always best to get the reloadable one. Now, the reloadable cards require you to provide certain personal information when you try to get one – like social security number, date of birth, address etc. This is because you are essentially applying for a debit card-like service and the bank issuing the card is required by law to get some identification information from you.
Check out this article from Forbes on the best and worst prepaid cards. You should review the video we posted above from Consumer Reports that reviews about 22 prepaid debit cards and provide some tips on how to avoid fees and charges. They also tell you which cards they like and don’t like.