Prepaid Debit Cards and Your Credit

ots of us have seen our credit take a tumble recently. It hasn't been an easy pill to swallow but it is what it is. Sometimes the problem stemmed from spending that had spun out of control and sometimes it was spending that was just necessary to keep our heads above water. But in any case, we now find we have far fewer credit options than before.

One of the financial tools that's still available to us though is the prepaid debit card. This is an actual MasterCard or Visa card that operates just like a credit card but with one very big difference. And that difference is the card must be loaded it up with money before it can be used.

This has two distinct benefits. One, it means we can't go deeper into debt by using a re-loadable debit card and two; we have to think about the money we're spending before we actually spend it which helps us control our budget.

Unlike credit cards, prepaid debit cards are actually purchased. The cards usually cost anywhere from $5.95 to $9.95 but it is even possible to get free prepaid debit cards in some cases. After they're purchased, they can be loaded up with cash. There are no qualifying applications to fill out and no one has to worry about their credit score because no one needs a credit history to buy one. This is a great feature for anyone who's lost or had to close their credit card accounts.

Now there are no interest charges or hidden fees with a prepaid card but there are fees to consider. Cardholders will be charged a small amount every time they reload the card; and they'll also be charged a monthly fee to keep the account open. There are some other fees but they're all spelled out in advance so there aren't really any surprises. Also, using re-loadable cards won't do anything to improve anyone's credit or credit score - they're not credit-driven.

So a prepaid debit card is a good deal. It doesn't cost much and it can help us manage our money and budget fairly easily. Maybe credit cards aren't necessary after all.