Can a Prepaid Debit Card Help With Your Finances?

I am pretty firmly anti credit cards, because I see how much trouble they can get you into financially. However, a reader sent me this post about how prepaid debit cards can actually be helpful with your finances, and I'll admit it got me thinking. 

In a nutshell, a prepaid debit card is a financial instrument that makes your life easier. You can look at it as plastic money. The card requires you to load it with a certain amount of money that you can use to make purchases, pay your bills, and pretty much anything that plastic money can do. It comes with a number of incredible benefits, including limiting your spending, helping with budgeting, avoiding high banking fees, saving time, and avoiding the risks of carrying cash, among others. But really, can a prepaid debit card help with your finances? And if so, in what ways can it do so?

Well, if you guessed right, the right answer is YES! Here are a few ways how a prepaid debit card can help with your finances.


It can help you avoid overspending

One of the major benefits of a prepaid card is that it requires you to load it with cash in advance prior to spending. This means you can preload your card with just the right amount of money you need to spend within a particular period. It goes without saying that this will help you to avoid making unnecessary purchases since more often than not; your funds will be limited to a specific purpose. According to many studies, it has been found out that more consumers who use credit cards tend to overspend compared to consumers who use prepaid debit cards. It is easier to avoid the temptation to make impulse purchases when you load your card with a limited amount of money.

It can be helpful in building or rebuilding credit

Before you become all too judgey, a prepaid debit card will not directly help you build or rebuild credit. On the other hand, a credit card can directly help build credit. However, a prepaid card can be extremely helpful as a first step to allow you to learn how credit cards work and help you to avoid the temptation to overspend. When you get a credit card after gaining some experience with prepaid cards, it becomes easier to stick to your budget. You will be more disciplined when it comes to swiping and making online purchases with your credit card, which will help avoid incurring high interests, over-limit fees, and other fees associated with credit cards. A prepaid card can help you become a better spender with plastic money.

You can avoid the risks of carrying cash

There are many risks in carrying cash. For instance, most people have to deal with the temptation to overspend when carrying cash. Additionally, hard cash is easy to lose, and you can’t rule out the possibility of getting drugged or cornered by the bad guys. Losing hundreds or probably thousands of dollars to some con men or robbers will obviously be a devastating setback to your finances. Especially when you have to carry a huge amount of cash from point A to point B to make a payment, carrying it in your prepaid card can be a safer alternative.

Helps with budgeting and keeping track your expenses

One of the best ways to stay financially fit is to plan your expenditure right and track your expenses, among other things that personal budgeting entails. When you keep proper track of your expenses, it becomes easier to note where things aren’t going right and even make the necessary budget adjustments to improve your spending. However, sometimes it can be extremely hard to keep track of every dollar you spend to the last cent. A prepaid debit card can be a great tool to improve your budget and keep a solid track of your expenses for each month, which is good for your financial health. Including budgeting for purchases, giving yourself an allowance and observing your monthly limits, there are various ways a prepaid debit card can help you budget. Depending on your prepaid card provider, it is possible to even get SMS or email alerts every time you use the card, or a deposit hits your card account. This also improves your money safety, allowing you to block the card just in case someone gains access to your PIN number or secret code.

Prepaid cards can be a great alternative to holding a checking account

As much as checking accounts have their benefits, there are certain flaws to deal with too. For instance, you have to walk all the way to the bank or send someone anytime you want to deposit a check. Depending on your bank, most checking accounts also require the account holder’s presence and signature for them to know their account balance, get an account statement, hold funds, and other activities. Sometimes you have to pay hefty amounts in overdraft fees, checkbook fees, and monthly fees for a checking account. A prepaid card can be a cheaper and more convenient alternative for those who’d rather do without a checking account.

Can help avoid going into debt

More often than not, people experience financial turmoil as a result of debts and mismanagement of their money. As pointed out earlier, a prepaid debit card can be a great tool to develop some spending discipline and avoid debts. Since you can only spend what you have, it is less likely for you to fall into the traps getting into debt. And for most people, debt can be quite addictive. With a prepaid card, you won’t be making your purchases or paying your bills off on credit. As much as credit cards are also helpful and convenient, a prepaid card can be a better option for those who tend to fall into the temptation to overspend.

They’re great for holiday shopping

A prepaid debit card can be a great tool to avoid the hectic experiences that come with holiday shopping. In this period, most stores are full of people trying to buy their holiday supplies and gift for their loved ones. With the extremely long queues that characterize holiday shopping losing cash or getting pick-pocketed may not be a hard thing. Loading your prepaid card with the funds you need for holiday shopping can be a great tool to avoid the risks and save time.

It makes online shopping easier, safer, and better

This is perhaps one of the best benefits and things you should know about prepaid cards. For starters, it allows you to shop online from the comfort of your home, office, or car. It goes without saying, that cash won’t allow you to make purchases over the internet. With cash, you have to physically visit a store, perhaps stand in long queues and drive all the way back home. With a prepaid card loaded, you don’t need to spend on gas money, or sometimes have to stay in traffic for hours to buy what you need. You just need to search online for a store that supports your prepaid debit card issuer and make your order.

As a matter of fact, most online stores provide incredible offers and discounts as well. This is good for your finances since it allows you to save. You just have to be wise enough to compare prices from various stores and choose a reliable one that best suits your budget. It gets more interesting since you can actually do all this within minutes, thanks to technology advancements and improvements in the world of online shopping. No gas, no long queues to deal with, no traffic to beat, and no pickpocketers to worry about.

And there you have it! From the above few pointers, it is clear that a prepaid debit card can do more than just improve your finances. It can also make your life easier and more convenient. You just need to make your comparisons right, consider the fees, and think about the benefits as outlined in this post to pick a good one.

See my disclaimer.