What Exactly Are Prepaid Debit Cards?

Prepaid debit cards are relatively new on the financial scene. They haven't been around as long as their older siblings (credit cards) and they're not nearly as widely used either. But they've been making their presence felt by delivering strong value and actually out-performing credit cards in several important areas. But what exactly are prepaid debit cards?

Prepaid cards are bank-issued Visa cards or MasterCards that utilize no credit. They are strictly pay-as-you-go cards which means you must load them up with cash before they can be used. You purchase the cards, load them up, and then spend down the balance however you want. This means you can never overspend with them because once your balance hits zero, that's it, they won't carry another transaction until they're reloaded with more cash.

One of the reasons reloadable debit cards have become so popular recently is because you don't need to pass through a credit check to get one. All you really need is valid identification. For people with no credit history or very poor credit this has been godsend – it's been especially helpful during the recent economic troubles we've seen.

But the real reason these reloadable prepaid cards have been on the rise is the value they return to their cardholders. The cards can be used exactly like credit cards which means they're good at retail stores, ATMs, and online. But they carry none of the credit card baggage we've come to dislike.

For instance, since they don't run on credit, there's never an interest rate to worry about. In fact, there's never even a monthly bill to worry about because you only spend money you've already earned not money you're going to earn in the future. Likewise there are never any late fees or hidden fees. Prepaid debit card fees are clearly spelled out and charged up front.

Finally, there's an intangible benefit to using these kinds of debit cards; they cause you to think about your spending differently than you would with a credit card. You tend to consider your purchases more carefully before you make them and that means a lot less impulse buying which translates into more cash on your bottom line at the end of each month.

Prepaid debit cards act like electronic wallets. When you use them you don't have to carry around a lot of cash. And yet you can spend your cash everywhere while still keeping it safe and secure.

These kinds of cards are now being sold at most major retailers and by several companies online. The Federal government and several State governments are now beginning to use prepaid cards to deliver tax refunds and benefits. The prepaid debit card is really coming of age.

So do yourself a favor and try one of these cards on for size. With just a little bit of practice you'll see how useful they can be and you'll wonder why you ever even needed a credit card in the first place. So what exactly are prepaid debit cards? Why they're simply great financial tools.

By: Andrea Z Warren

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To learn more about reloadable debit cards and find out why they're such great financial tools, please visit PrepaidDebitCardsOnline.com.