Prepaid Debit without a Bank Account

Interestingly enough, there are 1.6 million people in our country who do not have a bank account. These folks do not have a checking account, and some can’t qualify for them. Additionally, there are increasing numbers of consumers who want to get their spending under control and avoid the high interest charged by credit cards. (Especially since credit card issuers will often let you go over the limit so that they can hit you with another fee.)

It you are in one of these boats, prepaid debit may be just the thing.

What is prepaid debit?

A prepaid debit card works like a reloadable debit card. You put money on it, and then you can use it like a credit card. It can be used to make online purchases, and it can even be used for direct deposit. You can also get money out of ATMs. This is handy for people who do not have bank accounts, and who are tired of paying check cashing fees. They can simply have their paychecks direct deposited onto the prepaid debit card.

There are no interest charges, and you can’t overdraw your account, so it can help those who are trying to break the credit habit, but who do not want to give up the convenience of plastic. It is even possible to write pre-funded checks from prepaid debit accounts. Some also come with savings accounts.

Fees associated with prepaid debit

There are fees associated with prepaid debit. First of all, some cards carry a monthly fee. While usually smaller than interest on a credit card account with a balance, it is still a fee. Additionally, you may have to pay an ATM fee. Depending on the type of card you get, though, there are some ATMs across the country that are fee-free.

Be careful before you decide to take the prepaid debit plunge. You want to make sure you are getting the right card for you, and one that offers the benefits you are looking for. CreditCards.com actually has a pretty good overview of the different prepaid debit cards available.

Image source: James Callan via Flickr