Dec 20, 2011 – As a larger and larger percentage of the population enters the prepaid debit card market, there are exaggerations and untruths perpetuated nationwide. When using any financial tool, there are methods that can financially benefit cardholders, while others that can be quite detrimental to the pocketbook. Below are a few prepaid card fallacies that we have outlined for you:
- Prepaid cards can solve all of your budgeting problems – It’s true that cards like the KLS Prepaid Visa RushCard can be used as a tool to HELP you manage your money and most cards will just be declined if you try to spend past the amount loaded on the card. Still, financial responsibility comes with each person’s ability to plan, budget, save and control spending accordingly. There is no financial instrument that can solve all of your financial challenges for you.
- Prepaid cards have outrageous fees – While there are some prepaid cards that can accrue rather high fees, there are those like the Western Union MoneyWise MasterCard that have extremely competitive fees, not only with other prepaid cards, but traditional banks and check cashing services as well. Fee structures vary from card to card, so cardholders need to read the terms and conditions to determine most advantageous usage.
- Prepaid cards will help you improve your credit score – This has been one of the biggest exaggerations of prepaid cards out there. The READYdebit Visa does provide a free “ScoreTracker” that allows you to track your credit score, credit attributes and debt over time. While that is a great feature, the three main credit bureaus do not recognize ANY prepaid card usage and user’s FICO scores will not be affected one way or the other.
- Prepaid cards are ONLY for people with bad credit – A great many people with challenged credit do take advantage of prepaid cards so as not to live beyond their means. There is a significant amount of the population that use prepaid cards to save money on fees (bank, check cashing, overdraft, etc.), protect their identity or even enroll in programs like the BillMyParents Spend Smart MasterCard to assist their children in the art of financial management.
- Prepaid cards can only be loaded at retail stores – Green Dot MoneyPaks found at many retail stores are a very popular method for loading money on prepaid cards like the Mango MasterCard. Now, a large variety of prepaid debit cards can be purchased online and shipped directly to your home address in a matter of days. Mango actually delivers you a “Virtual” card the instant you are approved online for immediate purchasing transactions.
These are few of the larger myths surrounding prepaid products that might have a little basis in truth, but not much. There are online information sources available to assist you in choosing the best prepaid card for you. Just take some time to investigate.