Alternatives to Prepaid Debit Cards

by Carrie on January 23, 2012

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In my last post I talked about the new prepaid debit card created and endorsed by Suze Orman. The majority of the focus was on her reaction to the media and financial bloggers’ response to her new product. But I’m going to put focus back on the original issue, and that’s the drawbacks to using prepaid debit cards.

They target a certain demographic

Prepaid debit cards are specifically targeted to help people who are unbanked, meaning they can’t or choose not to use a normal bank to hold their money. Some people believe banks aren’t very secure, and others don’t have good enough credit to get approved.

They have loads of fees

There is no such thing as a free prepaid debit card. You can avoid paying fees if you meet the qualifications of that particular card (direct deposit, minimum transactions). The companies or individuals that endorse them are in it to make money. Plain and simple.

So, basically when it comes to prepaid debit cards they tend to focus on families with lower income, and charge them crazy fees. Not one of the best, or well thought out products out there. And many people consider them to take advantage of families in poorer demographics.

- Here’s a few alternatives


Credit unions

As I’ve mentioned before, credit unions and small community banks have lower fees than bigger corporate banks. Which means, you can open an account and get a free debit card at most local banks. There’s usually no additional fees, or requirements to use the account. It’s much less hassle than a prepaid card.

Online banks

Two online banks in particular that I use are, PerkStreet Financial and ING Direct. Both offer free debit cards with hardly any strings attached and must less hoops to jump through. All you have to do is mail a check, direct deposit or transfer money from an outside account to refill your funds. It’s like a built in budget!

Cash only

Cash is one of the cheapest options, and lots of businesses accept it. It’s easy to track and can be used to stay on budget. There’s no additional fees and you can control the amount you spend. The downside is you won’t be able to make orders or payments online with cash.

What do you think of prepaid debit cards?

Carrie Smith lives in the southern state of Texas, where she was born and raised. She is the genius behind the Careful Cents personal finance blog, and a Certified Bookkeeper who works hard and plays hard. She’s also a career junkie, social media addict, traveler, debt hater and food lover.
 Alternatives to Prepaid Debit Cards
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