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Archive for the ‘Debit Cards’ Category

Nowadays there are many options to carrying cash, and the one choice that is gaining popularity is the Prepaid Debit Card, also known as the Prepaid Credit Card. Although these debit cards are being advertised on television, radio and the internet, their use and purpose is clouded in mystery. We will explain what they are and how to use the prepaid debit card.

Terms to Know

o Branding – Adding Visa or MasterCard logo to a debit card, thereby backing the debit card with the benefits and security of these credit card companies.

o Debit – Deducting from an existing balance.

o Load – Adding money to the balance of the card.

o Reload – Ability to add more money to the balance once the original ‘loaded’ balance has been depleted.

“Prepaid Credit Card” – Debunking the Myth

First, we will clear up the most common misconception with these cards. They are not credit cards in the traditional sense. A “traditional” credit card is a card that draws off a credit line balance with each use/purchase. A prepaid debit card is a card with either a Visa or MasterCard logo and can be used to pay for goods or services anywhere Visa or MasterCard is accepted, however all purchases are drawn from a prepaid balance that you have loaded onto the card. Once the balance has reached $0, you are no longer able to use the card for purchasing until the balance is reloaded.

Evolution of an Industry

In the beginning, in terms of banking, there was an Automated Teller Machine debit card. This type of card allowed the holder to access their bank account balance without having to physically go into the bank. The ATM card holder was able to go to a new type of cash access point (the Automated Teller Machine) usually located outside their bank and get cash out, debiting from the available cash balance of their bank account. As this new type of bank account debiting system evolved, merchants and banks teamed up to allow ATM card holders to access their bank accounts at various locations, such as a grocery store or other kiosk ATM machines located around town.

Through gradual progression of the financial industry, Visa and MasterCard got involved and joined the efforts of banks and merchants to brand the ATM card with either the Visa or MasterCard logo. These new Visa or MasterCard branded ATM debit cards now had the ability to be used to pay for goods and services anywhere a Visa or MasterCard credit card was accepted, while still drawing off the bank account balance the ATM card is associated with.

The next step for Visa and MasterCard was to create standalone “Gift Cards”, which were originally loaded with a prepaid balance and could be used just as a Visa or MasterCard, but purchases were debited from the actual prepaid balance, and required no bank account. These Gift Cards could not have their balance reloaded.

This brings us current to today’s financial landscape, where Visa and MasterCard have introduced prepaid debit cards, which operate like a hybrid ATM card (minus the bank account) and Gift Card (but the balance can be re-added to). The card holder can load money onto the debit card, can access the balance anywhere that Visa and MasterCard is accepted, and can reload money onto the card balance.

The Visa or MasterCard Prepaid Debit Card

Now that you have a good idea of what a prepaid debit card is (and what it isn’t), it’s time to find out what the benefits are of having this new type of debit card.

Features and Benefits

o No Credit Check – A credit check is required when you apply for credit, since you are going to be trusted to pay the debt back. Since you are adding cash onto the card, and since the balance cannot go into the negative, you are not going to be in a situation where you are required to pay anything back, or owe any money from exceeding the balance.

o Safety and Security – Carrying cash nowadays is a risky venture. If you lose cash, you are out that amount of money and cannot conceivably recover the amount. Since you can load or reload the balance of a prepaid card with cash (almost anywhere), and since the cash balance on the card is branded by either the Visa or MasterCard logo, the same security and fraud protection is extended to the prepaid balance. If the card is lost or stolen, the prepaid card holder is not held liable for any fraudulent transactions. Your money is safe and secure.

o Bank Account Features – Most prepaid debit cards have bank account features, such as check writing privileges (the amount of the check is deducted from the card balance). You can also have your employer (although employment is not required to apply for card) directly deposit your payroll check onto the card balance. Since these are very attractive incentives, most prepaid debit cards have these features.

o Reload the Balance Anywhere – Most prepaid debit cards allow you to reload the balance almost anywhere. You can load via PayPal, at most bank branches, any Western Union or MoneyGram location and even by cashiers check or money order.

o Shopping on the Internet – Nowadays, you can’t be too safe when shopping online. Prepaid debit cards are a great choice in this situation because you can determine how much to load onto the card and since the balance cannot go into the negative, the chances of someone accessing your card information and running up a horrendous debt are non-existent.

o Other Benefits and Features – Since prepaid debit cards are branded with either the Visa or MasterCard logs, the prepaid cards have the same perks of regular credit cards. Some of these perks include roadside assistance, auto rental insurance, extensions on original manufacturer warranties, automatic bill pay and even merchandise rewards and cash rebates.

The Bottom Line

The best way to carry cash nowadays is a prepaid debit card. It’s also a great way to give a gift or pay kids an allowance. As a gift, the prepaid card is an excellent choice because the prepaid card is accepted anywhere, and doesn’t limit the recipient to one particular store or service. As a child’s allowance tool its ideal, since the transactions on a prepaid debit card can be tracked and accounted for, down to the last penny. As an online shopping resource, it’s handy because the card balance cannot be exploited. As a straight cash card, it can be used anywhere and just as safe as a credit card.

Good luck and remember to read all the facts and find out all the information before making important financial decisions.

Universal prepaid debit cards can be a handy option for anyone, especially those who do not like the idea of a traditional credit card, or those who are trying to rebuild their credit.  These cards can be used anywhere a major credit card can be used, however they provide many unique benefits. 

One of the most important benefits of universal prepaid debit cards is that because they are prepaid, you do not have to worry about spending more money than you have or incurring any debt.  You can only spend as much as the amount you have paid into the card already, so there are no over the limit fees to worry about, and no interest charges.  They also eliminate the hassle of having to carry cash, and provide protection in the event the card is stolen.

Universal prepaid debit cards can also be a great learning tool for teenagers.  You can load a certain amount of money onto the card, which will give your child a bit of independence; however you still have a handle on just how much they are spending.  They are a great option for students going off to college as well. 

Parents can load the card on a monthly basis, which will help to keep track of spending, while teaching students how to budget.  Some cards also offer online access, which will give parents access to monitor what the card is being used for, as well as reload it when necessary.

The process of applying for universal prepaid debit cards is very simple.  In many cases, all you have to do is fill out a basic application and you will receive your card, with a PIN, in about a week.  Because these cards are prepaid, they generally do not require a credit check. 

All you will need to apply for a card is some basic personal information.  You should be prepared to provide your name, address of residence, your date of birth, and a few other basic contact details, such as your phone number and/or email address.  That is it!  Once you have completed the application, you will most likely be approved and your card will be sent to the address you provided.

It is important to note that universal prepaid debit cards should not be confused with secured credit cards.  Secured credit cards typically charge interest on the amounts you deposit onto the card, and report your behavior to the major credit bureaus.  Universal prepaid debit cards do not charge interest on deposits, and they do not report to credit bureaus. 

They do, however, charge small fees for loading funds onto the card, as well as some fees for using the card.  Because each card issuer works a bit differently, you should take some time to look into how fees are charged, as well as how much the fees add up to in a course of a month.  This will help you to determine which option is best for you, and meets the needs of your current spending habits.

My first time overseas, I had to exchange cash in $200 of travelers checks to pay a mountaineering guide who hadn’t heard of American Express. The bank charged me $8. During the same trip, I used my debit card at an ATM to get $200 from my checking account. Once home, I saw that the charge for this was one dollar, and that was the last time I used traveler’s checks.

Debit And Credit Cards When Traveling

I usually carry a debit card and a credit card when I travel now. I keep them well-hidden in two separate places. If they are stolen, which has never happened yet, they have either zero liability, or a fifty dollar liability limit for any unauthorized charges. Ask your bank or credit card company about this.

When an Automated Teller Machine (ATM) won’t take one of the cards for some reason – and this will happen – I use the other card, which usually works fine. Credit cards may be less trouble than debit cards. Your liability could be zero on your stolen debit card, but you probably won’t have access to your account until the matter is sorted out.

Of course, on longer trips it’s a hassle to pay the credit card bill on time, which isn’t a problem with debit cards. Carry both, and on longer trips you can wait until you’re a few weeks from home to use the credit card. That way you’ll get there before the bill does.

An important advantage credit and debit cards have over travelers checks, is that when you need the local currency, you’ll almost always get a better exchange rate with your cards. Also, the cash you get from the local ATM will truly be accepted everywhere, something even American Express Travelers Checks can’t promise.

I have nothing against American Express. Once, when I was robbed in Mexico, they quickly and curtiously replaced my stolen traveler’s checks. Also, at times it is appropriate to carry money in several forms, including theirs. However, times change and ATMs are everywhere now, so my policy is : Travelers checks; don’t leave home with them. You can take an American Express credit card instead.

Prepaid debit cards are the wave of the future folks. Get used to it. They make sense in this tough economic climate and they’ll also make sense when the economy rebounds. More and more people are discovering that spending money that you have is a better way to go than spending money that you don’t have (credit) and prepaid debit cards are the best financial tool for doing just that.

Now there are a lot of reasons why these prepaid Visa cards and prepaid MasterCards are useful, but let’s just look at three.

No Credit Check

Prepaid card companies are selling you a product, not credit. So there’s no need for them to do a credit check before they issue you a card. That’s great news to the many people who have no credit or very poor credit because it means they’re guaranteed approval. And that means they can acquire a card and use it to make all of the same kinds of purchases anyone with a normal credit card can make.

No Monthly Finance Charge

Credit card companies make a lot of money by charging you a finance charge on the balance that you have outstanding. That charge can be calculated any of several different ways and the terms can be changed just about any time the credit card company wants to change them. But prepaid debit cards carry no credit balance so there’s no finance charge. Instead there’s a monthly maintenance fee which is usually pretty low and which doesn’t change from month to month. That saves you money in the long run and makes it much easier to manage your finances each month.

No Long-Term Contract

Once you’ve charged up a balance on a credit card, you have virtually no control over your relationship with the credit card company. That is of course unless of course you can pay off the complete balance. Most people can’t do that, so they’re stuck with whatever terms the credit card company wants to throw at them. And those changes are almost always made to benefit the credit card company, not you.

But with a prepaid debit card, your relationship is different. You’ve pre-loaded your card; the money is already yours, and the prepaid card company is in no position to change terms on you. If they were to do that, you could simply spend or withdraw your money and take your business elsewhere. You’re in the driver’s seat not the company so you can end your relationship with them whenever you want to. That’s a powerful position to be in.

If you’re starting to come around to the idea that paying as you go is a better way to manage your finances than using expensive credit cards, then you’re a prime candidate for a prepaid debit card. Do yourself a favor and learn more about this popular and powerful budgeting and financial tool.

Over the years the UK has become a nation that pretty reliant on paying for purchases on plastic, whether debit or credit card, saving us the hassle of having to carry cash around, make countless withdrawals from cash machines, or write out one cheque after another to make purchases.

Paying by card for purchases is a very convenient and easy way to shop, and save you both time and hassle. Paying by card also makes it easy to make purchases online or by phone, both of which have become popular ways to shop for anything from groceries and holidays to clothes, gifts, and more.

When it comes to which card to use for making purchases preferences can differ from one consumer to another, and there are pros and cons to using both debit and credit cards. Both offer ease and convenience, but there are some points to consider when deciding whether you are better off shopping with a credit card or a debit card.

Credit cards

Credit cards enable the consumer to enjoy credit up to a specified limit, and depending on the card can also offer other benefits such as extended interest free periods, purchase protection, rewards points, cash back, and more.

Pros of credit card use

Being able to pay for purchases without carrying around cash or writing cheques Being able to shop online or by phone Being able to purchase items and enjoy interest free credit for a specified period Being able to spread the cost of purchases over a long period Being able to enjoy credit up to your specified limit making it easier to buy the things you want without having to wait and save up Being able to benefit from rewards (subject to card used) such as cash back, rewards points, or air miles Great choice of cards to suit most needs and circumstances, including for those with poor credit to help them to rebuild their credit
Cons of credit card use

The risk of getting into high levels of debt that becomes unmanageable Risk of credit card fraud Being charged often high interest rates on balances that are not paid in full each month
Debit cards

Debit cards are usually issued by your bank, and these enable you to enjoy the convenience and ease of using plastic to pay for purchases, but you must have the necessary funds already in your account before you can spend on your debit card. You can enjoy some benefits with your debit card such as extended purchase protection and emergency card replacement, although you should check the terms attached to your particular bank in order to see exactly what sort of benefits you have.

Pros of debit card use

No risk of getting into debt, as you have to have the money in your account in order to use the card Ease and convenience of paying by card without the need for cash or cheques Being able to shop online or by phone Extended warranty on purchases with many debit cards
Cons of debit card use

No credit facility so you cannot spend unless you already have the funds Risk of debit card fraud No facility to spread repayments on purchases No additional benefits such as rewards or cash back

As a merchant accepting plastic from your customers, you will take a mixture of actual credit cards and debit cards, also known as “check cards”.