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The Truth About Pre-Paid Debit Cards: Part One, The Advantages

Pre-paid debit cards don’t get much love from the mainstream financial press, and yet they’ve proven to be popular, and are increasing in use and availability. In 2008, pre-paid debit cards were loaded to the tune of $8.7 billion, a 125% increase over the previous year. That amount is expected to increase to $125 billion in 2012.

What’s the truth about pre-paid debit cards? How can you use them wisely and take steps to protect yourself?

First, understand the difference between a bank debit card and a pre-paid debit card—they are not the same. A debit card from your bank is used as a “draw” on your checking or savings accounts; is limited in funds only by the amount you have in your accounts at the time; and is subject to regular bank fees, including checking account, overdraft and ATM fees. A pre-paid debit card is not attached to a bank—you do not need to have a checking account to get and use one; there may or may not be small fees to set one up and use it; it can be loaded with whatever amount you choose. Neither bank debit cards nor pre-paid debit cards are subject to financial information oversight as credit cards are, so it is up to you to make sure you understand what you are getting, and to protect yourself and your money.

What Are the Advantages of a Pre-Paid Debit Card?

You don’t have to qualify for it as you would for a credit card, but you can use it in most places you would use a credit card, even internationally.

You don’t need a bank account to get one.

No monthly bills or late charges!

It’s safer to carry than cash.

And you can still use it to withdraw cash from the card if necessary.

You can use it to shop on the internet without needing a credit card.

It can be easily reloaded with funds, via the internet, phone, or ATM.

You can use it as a savings account, even keeping funds on different cards for different purposes. You can also give it as a gift (a good choice to give a student for school expenses).

You can also use it as a way to budget and to control your spending: There’s a definite limit on what you can spend, and you can’t rack up debt, unlike a credit card.

Pre-paid debit card fees are generally lower in total than those fees imposed by banks on checking accounts with their accompanying debit and ATM cards.

As part of our financial services packages, we do offer pre-paid debit cards at PayDayHawaii.

With your pre-paid debit card, you are eligible for a NetSpend Savings Account: No minimum deposit, and it pays 5.00% interest (Annual Percentage Yield)—one of the highest interest rates in the country. Load your card with funds from your savings account, or use it to deposit funds. And it’s FDIC insured.

For more information visit us here, call 808-822-5115, or stop by one of our handy locations

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