Prepaid Debit Cards-The New Banking System?
Prepaid debit cards are eating away the customer base of many check cashing services. Gone are the days when workers had to visit the check cashing store to have their paycheck or government check cashed for fees ranging from 1.5% to 10% of the check amount. People who relied on this service now have a new option, one that is much more convenient and less expensive.
Enter the prepaid debit card. Both Mastercard and Visa have prepaid debit programs that have significant advantages over the traditional check cashing shop. Probably the biggest advantage is not having to carry around cash. If you have just cashed your weekly or bi-weekly paycheck, what do you do with the cash? Carry it on you? Hide it someplace at home?
Gone are the days of standing in line at the check cashing store and leaving with a wad of money in your wallet. Debit cards can be funded by direct deposit or using one of thousands of retailers that will provide the servie. The card is the only thing you need to make purchases, pay bills or get cash.
The debit card is not a credit card. The card is simply an electronic wallet for your own money. No credit check is made at the time of application and virtually everybody who applies for a card is accepted.
It is much safer to carry the debit card rather than cash, however there is a downside to the amount of liability you might be exposed to if you lose your card. Unlike credit cards, you only have two days to report the loss or fraudulant use of your card. If you report within that time frame you are liable for the first $50. If you take longer than 2 days, your liability jumps to $500. If you wait longer than 60 days you are responsible for the entire loss.
If you have a fraudulant charge on a credit card, the credit card company investigates and the worse that can happen is your credit limit is temporarily reduced by the amount of the charge in question. With a debit card, the money taken came directly out of your cash account. The bank may take up to 10 days to do their investigation and you are out the money for that length of time.
So how do these cards make money for the issuers? If you are thinking about using a debit card, make sure you carefully read the terms and conditions and fee schedule. There are many programs available on the internet and they all have different fee schedules and features. Look for a card that does not charge you to reload if you use direct deposit. Look for a card that will allow you to see your balance online or via telephone without a charge. If you shop carefully, you will definitely save money compared to the check cashing shops.
Enter the prepaid debit card. Both Mastercard and Visa have prepaid debit programs that have significant advantages over the traditional check cashing shop. Probably the biggest advantage is not having to carry around cash. If you have just cashed your weekly or bi-weekly paycheck, what do you do with the cash? Carry it on you? Hide it someplace at home?
Gone are the days of standing in line at the check cashing store and leaving with a wad of money in your wallet. Debit cards can be funded by direct deposit or using one of thousands of retailers that will provide the servie. The card is the only thing you need to make purchases, pay bills or get cash.
The debit card is not a credit card. The card is simply an electronic wallet for your own money. No credit check is made at the time of application and virtually everybody who applies for a card is accepted.
It is much safer to carry the debit card rather than cash, however there is a downside to the amount of liability you might be exposed to if you lose your card. Unlike credit cards, you only have two days to report the loss or fraudulant use of your card. If you report within that time frame you are liable for the first $50. If you take longer than 2 days, your liability jumps to $500. If you wait longer than 60 days you are responsible for the entire loss.
If you have a fraudulant charge on a credit card, the credit card company investigates and the worse that can happen is your credit limit is temporarily reduced by the amount of the charge in question. With a debit card, the money taken came directly out of your cash account. The bank may take up to 10 days to do their investigation and you are out the money for that length of time.
So how do these cards make money for the issuers? If you are thinking about using a debit card, make sure you carefully read the terms and conditions and fee schedule. There are many programs available on the internet and they all have different fee schedules and features. Look for a card that does not charge you to reload if you use direct deposit. Look for a card that will allow you to see your balance online or via telephone without a charge. If you shop carefully, you will definitely save money compared to the check cashing shops.
About the Author:
Chris A Smith follows the trends in the personal financeindustry including alternative banking products, bankruptcy, credit repair and laws relating to personal credit. You can see all of his articles and videos at the popular website TryCreditFix
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