What Are Prepaid Debit Cards (Visa and Mastercard)?
Tuesday, 12 October 2010 00:00
Prepaid debit cards are the big news in the debit card world. Great for travelling, kids and gifts... The economic woes experienced by many all over the globe have caused a credit crisis that consumers aren’t so fast to rebound from. This particular type of scenario is what has led to the rise of pre-paid debit cards. A Prepaid Debit Card, just like secured credit cards, offer the option of using plastic to pay for things even if you have credit issues.
Pre-paid Debit Cards
The economic woes experienced by many all over the globe have caused a credit crisis that consumers aren’t so fast to rebound from. This particular type of scenario is what has led to the rise of both the prepaid Visa debit card and the prepaid debit Mastercard. Prepaid debit cards, just like secured credit cards, offer the option of using plastic using Visa or Matercard to pay for things even if you have credit issues - they are effectivley a new alternative to normal debit cards. This could be the person who is just starting out in life and hasn’t had the time to build a credit history who uses a pre-paid debit card for online shopping; but it also can be for the couple who lost their home to foreclosure causing their credit to be ruined. This latter group is among the types of people we see using pre-paid debit cards more frequently as of late
There are of course positives and negatives to be considered when it comes to pre-paid debit card usage. The following are some points to consider on both sides of the coin with regard to the use of pre-paid debit cards.
Benefits:
You know the money is there because you have added it before ever spending a dollar. A pre-paid visa debit card is also an excellent way to manage your finances, even if you don’t have any credit issues. There is no concern with going over your balance; your credit line won’t be extended without your knowledge causing you to be lured into accumulating more and more debt. The credit line you have is directly linked to how much money you have placed onto the card. There is no gray area, everything is in black and white – you provide the cash and that is how much you have to use as credit.
Of course it is also nice for those who are facing challenges with their credit not to be put into situations of having to pay cash for everything. Not only is it a burden to carry around cash, it can be dangerous and is downright impractical in the world in which we currently live and a prepaid Mastercard debit card, for example is that much easier to carry around.
Downside:
Many use traditional credit cards to build up their credit score; this isn’t an option with a pre-paid debit card because no money is technically being offered to you. And because you must use your own money to back the purchases made, there really is no wiggle room. So let’s say your washer broke down unexpectedly and you needed to run out and buy another one right away, a traditional Visa or Mastercard credit card wouldn’t require you to have the cash right away, not so with a pre-paid debit card. The pre-paid debit card doesn’t offer help with those unexpected emergencies in life.
The bottom line is that for a certain segment of the population, the pre-paid debit card is a very welcomed option. It offers those who want the freedom of using MasterCard and Visa when their credit won’t allow them do so through traditional avenues for whatever reason.
