Prepaid Debit Cards

2008-10-16 14:47:41

( Financial )



Trouble with Credit Cards

Credit cards give you a lot of convenience as well as purchasing power. But the problem is that you are also tempted to spend more than necessary, so you end up with a large liability each month. And when you don't pay off the entire balance, you will have to pay interest on whatever remains unpaid. Credit card APRs can be quite expensive, so there's also the danger of piling up too many finance charges that may cause burdens for you in the long run.

In fact, credit card debt elimination is one of the biggest dilemmas faced by many consumers. They want to minimize debt obligations but otherwise find it difficult not to use their credit cards. Many credit card users are unable to service their debts and end up filing for bankruptcy.

Prepaid Debit Cards Compared to Credit Cards

Like credit cards, prepaid debit cards let you enjoy shopping without forcing you to bring large amounts of cash. You simply present the card to the merchant who will swipe it like a credit card, then you sign a voucher to complete the transaction. As with credit cards, prepaid debit cards have spending limits.

But the similarities end here. With prepaid debit cards, you determine your own spending limit by putting up an amount as your limit, just as you do when you put some cash in your pocket. Then as you use the card, you slowly deplete the available spending limit, until it reaches zero. Once the balance reaches zero, you can discard the card and buy a new one.

The best part about prepaid debit cards is that you don't have to worry about any future bills to pay as you use it. The amount you can spend depends entirely on the amount you placed in to purchase the card.

Other Uses of Prepaid Debit Cards

Prepaid debit cards are great for teaching children the value of discipline in spending. Instead of giving your child cash funds for shopping, you can give him a prepaid debit card. As in check and credit card payments, you need to sign for transactions and have your signature verified with a second identification card. Hence, prepaid debit cards are more secure than cash.

Prepaid debit cards are also great gift ideas, especially for preteen and older children. You eliminate the hassle of shopping for gifts yourself by just buying prepaid debit cards for your loved ones. Your recipients can choose the items they want, so they will appreciate prepaid debit cards as gifts.

In lieu of traveler's checks, prepaid debit cards are safer to carry around when you're traveling.

You can buy prepaid debit cards at participating retail outlets or at financial institutions.


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