Holiday Shopping: To Charge or Not To Charge?

If you are going to do a lot of online shopping this season, it’s best to shop without charging, if you can help it. By using a prepaid card, ideally, you can set money aside that you want to spend, load it up on the card and then shop until your heart is content, without spending money you really don’t want to spend.

Of course, keep in mind that some prepaid cards will charge you a fee. There are some great options out there however and a lot of times you can find a simple prepaid card that is perfect for you.

The Details…

According to USA.gov, prepaid cards issued by banks and other government-regulated organizations are a new way for consumers to make payments and conduct other financial transactions. There are plenty of situations where a prepaid card might be the most convenient choice, but be sure you understand the key terms and conditions before you buy.

Understanding Prepaid Cards

Preloaded cards that offer the convenience of plastic without the risk of taking on further debt is a great deal, providing that the consumer isn’t being hit with big fees associated with it. It appears that the Federal Government is offering a card with minimal fees as an alternative to a paper check. And for those who have attempted to cash a check without a bank account, they know that there is often a significant fee associated with check cashing services anyway. So this card appears to be a great deal for unbanked consumers. There are many options out there for the “unbanked”… including the Green Dot Mastercard prepaid debit card*, which I found to be a reasonable choice.

According to the FDIC (Federal Deposit Insurance Corporation), most prepaid cards are branded with the logo of one of the major card companies (such as American Express, Discover, MasterCard or Visa) and can generally be used at any merchant or ATM that accepts those cards. But unlike a credit card, a prepaid card generally will not allow you to build a credit history because no money is being borrowed.

Some prepaid cards come with a set value, while others require you to load money after obtaining the card. Other cards are used only to receive government benefits (such as the Direct Express debit card for Social Security payments) or wages deposited by employers (payroll cards).

Prepaid cards are also marketed as alternatives to traveler’s checks, especially for international travel, and as a way for parents to give an allowance to their children. They also are being promoted to consumers who are unwilling or unable to open a bank account.

Great practice for future cards?

Have you ever used a prepaid card? In my personal experience, when I was younger, it was a great way to get the hang of using a credit card before actually being responsible enough to own one.

* We are not affiliated with this card.