Understanding Prepaid Debit Cards
A prepaid debit card is much like a gift card: It allows you to spend whatever amount of money is stored on the card. You can reload the card online or at an ATM, a participating store, or another physical location securespend balance when the balance is used up. Prepaid debit cards are issued by banks and they’re branded by the major credit card companies, including Visa, MasterCard, Discover, and American Express.
Some employers pay their workers with prepaid debit cards that are referred to as payroll cards. This can be useful if the person doesn’t have a bank account or direct deposit. Many government benefits are also available via prepaid debit cards, including Social Security.The amount of money you can spend with a regular debit card is tied to how much you have in the checking account it’s linked to. You must have a bank account to use a regular debit card, but this isn’t the case with a prepaid debit card.
The amount of money you have available to you will also fluctuate from day to day with a regular debit card as money moves in and out of your checking account. You have a fixed amount of money to spend with a prepaid debit card, which decreases as you spend and increases only if you reload the card.Prepaid debit cards can come with an assortment of fees that will eat into your cash balance. These may include monthly fees, transaction fees, ATM fees, reloading fees, and foreign transaction fees. You may even be charged a fee for checking your balance on the card.