Millennials and Generation X love reloadable debit cards. Statistics indicate they buy more than $300 billion annually with their debit cards. With so much momentum, it’s likely that GenZers will follow suit.
What makes reloadable debit cards so influential? They build a bridge between bank accounts and credit accounts.
For instance, take one of the about nine million households without a credit card. Despite having no credit, they can get a traditional, bank-backed prepaid debit card.
Of course, people don’t have to be under-banked to get the advantages of reloadable debit cards. They’re useful for the budget-conscious, students learning fiscal responsibility, and cash-hating adults.
All consumers deserve to understand the pros and cons of reloadable debit cards. You can start by learning the five methods to ensure your card gives you what you need.
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1. Explore Many Types of Reloadable Debit Cards
Each reloadable debit card has its own perks. Before deciding on one, always do your research. You’ll quickly discover you have tons of options.
Want a good example? Consider the PayPal Prepaid Mastercard versus the Western Union NetSpend Prepaid Mastercard. The Mastercard company protects and insures both cards. However, each has its own pluses and minuses.
They both offer a free activation fee. Yet the PayPal Prepaid Mastercard has a maximum monthly fee of $4.95. And the Western Union NetSpend Prepaid Mastercard maximum monthly fee can be $9.95.
Fees may not matter if you only plan to use the card for one month. But it could become problematic if you have it for three, six, or 12 months.
To make comparing cards easier, design a spreadsheet by hand or on the computer. That way, you’ll have all the necessary facts in one spot.
2. Determine How Often You Want to Use Your Card
Are you planning to give a reloadable debit card as a gift? If so, you won’t have to worry much about ATM fees or purchase fees. Keeping your card as a wallet staple? It’s time to think through which card puts the most in your pocket every month.
Consider the NetSpend Visa Prepaid Card. You can activate it without any fees, but each month you’ll pay $9.95 to have the privilege of using it.
Additionally, whenever you want to use the ATM, you will be charged $2.50. Those charges can add up if you frequently opt to take out cash from your reloadable card.
Not sure how often you’ll actually use your card? Pick a low, all-around fee one and track your spending habits for a month. You’ll get a good indication of what type of card will help you stay on budget.
3. Read the Fine Print to Avoid Surprise Charges
Reloadable debit card providers make money by charging fees for their services.
You can expect to pay for the convenience and consumer confidence they offer. Hey, if you’re in a pinch and cannot get a traditional bank account because of poor credit history, it makes sense.
Aside from customary monthly and transaction fees, many cards have less well-known fees. They can be huge surprises for unsuspecting consumers.
One big fee is for balance inquiries over the phone, through an app, or online. Some cards charge several dollars for this service but don’t tell you. You could lose a lot of money if you frequently check your balance.
Another lesser-known fee is a cancellation fee. Like unsecured and secured credit cards, reloadable debit cards have expiration dates.
But if you decide to cancel the use of your card prior to that date, you could be hit–hard. Recent research shows that some cards ask for severance of you leave. And if you decide to keep the card open but not use it, you could also incur inactivity fees.
4. Check Other Consumers’ Experiences With Prepaid Cards
Narrowed your potential card list down to a couple contenders? Take a few moments to check out what other consumers say about those cards.
Online review sites and buyer forums dominate the Internet. They enable you to get an inside look at any card you’re interested in. Pay attention to all the comments and make notes on a separate document.
At the same time, take all reviews with a grain of salt. Look for detailed, specific feedback. Don’t let yourself be swayed by an emotional rant. Those types of reviews give little indication of how the card could work for you and your family.
5. Lean on Your Card to Become a Smarter Saver
Plan to use your reloadable debit cards to make life a little simpler. At the same time, take the opportunity to become a smarter saver in the process. If you’ve never had a debit card before, you can rely on it to help you make wise decisions.
Many people spend their cash when it’s on hand without a thought. A reloadable card helps you to stop and think. Do you honestly need that item? Could you wait to see if it’s on sale next week?
Using your reloadable card in this way can help you store up money. Then, you can use the money to open a savings account or meet monthly financial obligations.
Prepaid, Reloadable Cards: Safe, Straightforward Solutions
Going to use a reloadable card for your child’s weekly allowance? Want the freedom and security of not carrying cash? Hate the thought of traditional banking?
There’s a reloadable debit card for every situation. Just make sure you do the work up front. That way, you’ll know you’ve made a good financial decision.
Requesting a credit card in addition to getting a prepaid, reloadable debit card? Read our tips to understand the process.