150A Andover Street Suite 2 Danvers, MA 01923

978.777.6554
rcella@ipswichfinancial.com
Client Login
Ipswich Bay Advisors Home
Ipswich Bay Advisors Home
  • Home
  • Home
  • About Us 
    • Our Mission
    • Our Pledge
    • Our Team
    • Our Strategic Partners
    • Ed Slott Master Elite IRA Experts
    • Research-Based Investing
  • Services 
    • Retirement Planning
    • Tax Planning
    • Investment Management
    • Financial Planning
  • 401k Business Services 
    • Advisory and Management Services
    • Employee Education
    • Plan Sponsors
    • Participants
  • Events 
    • Meet Ed Slott Live!
    • Monthly Webinars
  • Resources 
    • State of the Market
    • Newsletters
    • LPL Research
    • Videos
    • Your Personal Retirement Machine
  • Contact Us
Client Login
Money Read Time: 3 min

Weighing the Benefits of Prepaid Debit Cards

Many Americans use some sort of prepaid debit card, for a wide variety of reasons. Some prefer them for their versatility and the ability to use them for everything from paying bills to spending money at retailers. They are also popular among the 7.1 million American households that, for whatever reason, do not hold a bank account.1

A prepaid debit card is established when an individual provides cash to a financial institution in exchange for a card that can be used like any debit card or credit card, except it is limited to purchases in an amount not to exceed the card’s cash balance. When the balance runs low, or is exhausted, the card can be reloaded with additional cash.

There are reasons why you might consider using a prepaid debit card, including:

  • For individuals with poor credit, who may be unable to get a credit card, carrying a prepaid debit card means they don't have to carry cash.
  • For individuals who have trouble managing their spending, prepaid debit cards can act as a restraint on poor habits.
  • As an alternative to credit cards for college students, they can help protect parents from their children's excessive spending, while teaching important budgeting lessons.
  • They offer potential protection against the loss of cash when traveling.
  • In a world of data theft, prepaid debit cards do not house personal data, such as your Social Security number or bank account information, shielding that data in the event of theft.

They do come with drawbacks, such as:

  • They do not provide any advance of credit, like a credit card. So if you have an emergency expense that exceeds your prepaid debit card balance, the debit card will be of limited use.
  • Prepaid debit cards may come with considerable fees, including account opening fees, transaction fees, and monthly charges. Depending upon the balance, fees can represent a high percentage of your cash value.
  • You will not earn reward points or rebates, like you might with a credit card.

If you are considering a prepaid debit card, be sure to comparison shop. The fees can vary widely, so look for an appropriate card. And keep yourself informed about your running balance so you don’t find yourself short on money.

1. FDIC.gov, December 17, 2021

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |

Have A Question About This Topic?

Thank you! Oops!

Related Content

Protecting Your Business from the Loss of a Key Person

Protecting Your Business from the Loss of a Key Person

Business owners may be able to protect themselves from the financial consequences of losing a key employee.

Keep Your Umbrella Handy

Keep Your Umbrella Handy

Umbrella liability can be a fairly inexpensive way to help shelter current assets and future income from the unexpected.

A New Way to Look at Your Bucket List

A New Way to Look at Your Bucket List

Bucket lists don’t have to be for tomorrow.

Contact

Office: 978.777.6554

Fax: 978.777.6560

150A Andover Street

Suite 2

Danvers, MA 01923

Series 6, 7, 24, 26, 63, 66

rcella@ipswichfinancial.com

Quick Links

  • Retirement
  • Investment
  • Estate
  • Insurance
  • Tax
  • Money
  • Lifestyle
  • All Articles
  • All Videos
  • All Calculators
  • All Presentations

Check the background of your financial professional on FINRA's BrokerCheck.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named representative, broker - dealer, state - or SEC - registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

We take protecting your data and privacy very seriously. As of January 1, 2020 the California Consumer Privacy Act (CCPA) suggests the following link as an extra measure to safeguard your data: Do not sell my personal information.

Copyright 2023 FMG Suite.

Securities and investment advice offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC. Ipswich Bay Advisors and LPL Financial are separate entities.  

Ed Slott is not affiliated with LPL Financial and Ipswich Bay Advisors.