Although many people have an account with a bank or credit union, there’s no rule saying we need a bank account in order to manage our money. Bank accounts provide a safe place to stash your check, and these accounts come in handy when you need to write checks, pay bills or take care of other expenses. But the truth is, a relationship with a local bank doesn’t work for everyone.
Bank fees aren’t getting any cheaper, and if you’re getting tired of the “nickel and dime” game, it’s time to consider other alternatives. Whether you don’t want a bank account, or you can’t get a bank account, prepaid cards can offer what you need and more.
If you don’t have a bank account, you might be uncomfortable carrying large amounts of cash in your wallet or keeping cash in your house. In these situations, you can’t always protect your money from thieves. And if stolen, cash can’t be replaced. Prepaid cards, however, offer a simple, safer solution.
But if you don’t know much about prepaid cards, you may not fully understand all the features, or understand why these cards make sense if you don’t have a bank account.
Direct deposit paychecks
If your employer offers direct deposit, you can deposit your paychecks directly onto your prepaid card. You don’t have to go to the bank or wait days for funds to clear your account. Your money is quickly available on payday and ready to use.
Avoid credit card debt
Since prepaid cards are not credit cards, there’s no risk of debt. You spend only what you deposit onto your card.
Use your prepaid card for bills, grocery and traveling
Prepaid cards are debit cards — not credit cards — so they won’t build or repair a bad credit history. At the same time, prepaid cards are just as functional as credit cards. Some cards have a Visa or MasterCard logo, and you can use your prepaid card wherever these cards are accepted, even when traveling in other countries.
Zero liability protection
Just like a credit card or bank debit card, you’re not liable for fraudulent purchases made with your prepaid card. If your card is lost or stolen, immediately contact the company that issued your card. The company will cancel your prepaid card, issue a replacement card and reimburse fraudulent charges.
Prepaid cards make it easier to manage your money when you don’t have a bank account, but not all cards are created equal. There are activation fees, monthly fees and reload fees, which vary by issuer. You’ll need to shop around and compare different prepaid cards to find one with the lowest costs.