Prepaid debit cards have come a long way since they were first introduced. Initially, they were just another form of a gift card; however, now many providers have added features to them making them very similar to a checking account. Here are some reasons why you might consider using a prepaid debit card for your cash management needs.
1) You Do Not Have a Bank Account
It is estimated that at least 1 in 4 households or 25% of US households do not have bank accounts. There are a number of reasons for this fact; however, more and more companies insist on paying their employees via direct deposit. If you do not have bank account, this makes it difficult for your employer to pay you electronically.
Prepaid debit cards, though, allow your employer to pay you via the card. Just as a company would send your direct deposit payment directly to your bank account, they could send it just as easily to the card. From there, you can use the card wherever it's accepted or withdraw cash via ATMs. There are a number of prepaid cards that have added the ability to write checks from the card as well; therefore, you can pay other bills that require check payment from the prepaid card.
A great benefit of using the prepaid debit card versus a bank account is that you typically avoid paying extra fees that banks charge for basic checking accounts. There are some cards that may charge you fees, though, so you want to make sure you pick the right one before you move forward.
2) You Need to Monitor Your Spending
One of the main reasons we like prepaid debit cards is that they are a great tool to help you control your spending and manage your budget. When you are looking at your monthly budget numbers, after you determine the amount that you can afford to spend on basic items like groceries, gas, eating out etc., you can set up a monthly transfer of this amount from your checking account to your prepaid debit card.
You will not need to worry about overdraft fees if you try to spend more than you put on the card, you will just be declined when you try to use this. It may be embarrassing to have your card declined in a public place; however, a small embarrassment is much better than overspending and breaking your budget.
3) You Don't Like to Carry Cash
Despite the fact that cards are accepted most places, cash is still king when it comes to paying for goods and services; however, it is not always convenient to carry cash. It may also be difficult for you to find an ATM that will not charge you fees. With a prepaid debit card, it is similar to carrying cash; however, you don't have to worry about carrying it on your person or running the risk of losing it or having it stolen while you are out.