Six Ways to Save Money by Using a Prepaid Debit Card

prepaid debit cardAre prepaid debit cards the best choice for everyone? No. Can you rack up exorbitant fees? You bet. Then why would anyone use a prepaid debit card? That is a great question with many answers.

One of the most prevalent answers is that there are many “credit-challenged” people who don’t qualify to open a checking account. Some people “plain don’t trust” traditional banks. More and more, parents are giving prepaid cards to their children to teach money management and monitor their expenditures. But what keeps many people up at night is when they hear negative information about prepaid card fees.

Again, it’s possible to incur a hefty fees on a prepaid card as with any type of financial account. You should always use any financial tool prudently, be it credit card, debit card, checking account, or even an IRA. Now, don’t get me wrong, there is nothing wrong with fees, per se. Institutions providing certain services MUST charge fees, or they wouldn’t stay in business. But prepaid cards, just like any other account have certain financial advantages. Here are six ways to save money using a prepaid debit card:

No Interest Carry – Since prepaid cards are, just that…prepaid, there is no balance carried over and therefore, no interest charged. This is earned money you load onto your card. No danger in looking at a statement a year from now and seeing hundreds or even thousands of dollars in finance charges.

Existing ATM Network – Some prepaid cards, just like bank and credit cards use and branded ATM network to dispense cash. Choose a prepaid debit card with a FREE ATM network and save that second “non-network” charge (almost all cards have an initial ATM Withdrawal Fee).

Get Cash Over – If you want to avoid ATM Withdrawal Fees altogether (who doesn’t?), then choose a prepaid card that doesn’t charge you a fee “cash over” fee. Just tell the retail cashier up front you want the extra cash.

No Overdraft Fees – Once again, you have already loaded “earned” money on your prepaid card. When the card reaches a zero balance, you will no longer be able to use it. Load more money onto the card to use it again. Be careful, as some prepaid cards will charge a Negative Balance Fee if you somehow end up charging more on the card than you have available. Always read the Terms and Conditions of your prepaid card.

Direct Deposit – This is perhaps the best way to save a lot of money as most prepaid card companies waive their monthly fee (of give some other incentive) when a cardholder uses direct deposit. At the prepaid card’s website, you can print out a direct deposit form to fill out for your employer or send to your benefits provider. Funds from your paycheck or benefits check will be automatically loaded on your card at the end of the pay period. You should be able to check your balance online at the card’s website. High retail check cashing fees can also be saved by using direct deposit.

Money Orders, Bill Pay and Time – Some people cash their paycheck at a retailer (fee), get a money order for their rent (fee) and then run around town (fill up gas tank) to pay their utilities and cable bill. Not only did they waste money in fees charged, but they wasted time and gas driving around. Many prepaid cards have an online account management system that allows you to pay your bills online at no cost.

There are many people out there that do not know they have more choices available to them (like prepaid debit cards) when it comes to cashing a paycheck, using an ATM or paying their bills. Prepaid debit cards aren’t the best solution for everyone, but if used properly, they can save many cardholders from wasting their hard-earned money.

Tracy Jones is a content contributor for, which provides information about prepaid products, including the AccountNow Visa prepaid debit card.

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