Prepaid cards are popular because they are easy to get, you can avoid the money and you don 't need a bank account to get one. Furthermore, because they are debit cards, not credit cards, you only spend what is loaded on the card. They are popular for everything from gift cards to pay checks - and prepaid re-loadable are increasingly popular for travel and as a source of funding for children attending university
But -. and there is a huge but - not all prepaid cards are created equal. If you're not careful, you can wind up paying fees and exorbitant fees to buy the card, use the card to add money to the card, and more. In addition, all prepaid cards are supported by the FDIC, so if they are lost, no luck (although you could check with your agent to see if your homeowners policy will cover loss of cash up to a limit - usually no more than $ 0). To make matters worse, prepaid card scams are multiplying so you need to be on the alert.
Although prepaid cards can be a good choice in some circumstances, it is really important to be a smart consumer and find out about the advantages and disadvantages before buying. Here is a short video of consumer.gov that talks about how you can lose money.
And here are some good resources to learn more about prepaid cards and how to be a smart consumer.
- Prepaid Cards to Consumer.gov
- Ten things you need to know about debit, credit or prepaid cards - FDIC
- Consumer Reports - Prepaid Guide purchase card
- Nerdwallet has a tool to compare 82 debit cards offers
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