Using a prepaid card has changed the way I handle money. They are safe alternatives to your bank-provided debit card, and you can use them virtually anywhere. In the past, most of the people using prepaid cards were those who didn’t have traditional bank accounts, due to lack of access or funds for fees, or because they couldn’t qualify for a credit card due to low credit scores. This is not the case anymore. The Federal Reserve conducted a payments study, and the use of prepaid cards have steadily increased since 2006. Here are some reasons it might be a good idea to use one.
No Direct Link to Bank Information
Prepaid debit cards work just like your bank card without the direct link to your account. I like to think of it as an extra layer of protection between potential theft and my money. If you lose or someone steals your card, they are limited to what’s available on the card. I only add funds to my card when I’m checking out, or I’m preparing to pay a bill. Otherwise, there will only be a few dollars available at most.
Track Your Spending
You can use prepaid debit cards for almost anything. I use my card to get gas, buy groceries, pay bills online. My copay at the doctor’s office and my gym membership. Every time I use it, I get a text message with the details of my purchase immediately. This reduces the number of receipts I carry yet still provides spending information for budgeting.
Control Your Spending
Making a transfer before every purchase also helps me reduce my spending. When I used cash, a bank card, or a credit card, it was very easy to swipe without thinking about the cost. Adding funds is like going into your vault and counting out what you want to spend. My goal is to keep as much in the vault as possible.
Send and Receive Money
I also use the app for my prepaid debit card to send and receive money for free. It’s been very helpful when I’m out at a group dinner, and there is only one check. It usually only takes seconds, and I don’t need to give or receive any bank information. This could be really helpful if you have a child away at school or camp.
Reminder to Cancel Subscriptions
As I mentioned before, I use my prepaid card for all of my bills but especially any free trials. I try to add an entry to my calendar to cancel before I’m charged, but sometimes I forget. Since I have to make sure there are funds on the card before it automatically renews, the charge will decline. That’s my backup reminder to cancel my subscription, and I won’t get charged. If I want to keep the subscription, I just add the declined amount, and the company will usually try again within 24 hours.
If you’re trying to transition to debt-less living, you should consider a prepaid debit card. Some cards are free with no fees, so it won’t cost you anything to try it. Click here for a report compiled by Infosys detailing the prepaid card industry.