Prepaid Debit Card

What Is A Prepaid Debit Card

When you use a prepaid debit card, you are using your own money in your own account to make your purchase. All debit cards are "prepaid" because it is your money, and it is immediately deducted from your bank account.

Although there are times when people use the terms "credit card" and "debit card" interchangeably, in fact, they are vastly different. When you use credit cards (as the name implies), you are making purchases on credit using someone else's money. And as previously explained, with a debit card, the money used belongs to you.

Fact About Debit Cards

Over the last couple of years, the use of debit cards has increased greatly. When asked "credit" or "debit", we are beginning to hear the debit request more and more frequently. In fact, 20% of all credit transactions are done with debit cards. Although these cards have been used often in European countries, they were relatively unheard of anywhere else until recently.

As a general rule, debit cards look just like credit cards and are accepted everywhere credit cards are accepted. Although no interest fees are charged to use these cards, some retailers have charged small service fees for processing them in the past.

With a debit card, whenever you make a purchase, the money is automatically deducted from your checking or savings account.

Downside To Using Debit Cards

There are a couple of drawbacks to the debit card, namely:

• You are not as well protected from fraud with a debit card as you would be with a regular credit card. With this in mind, you should be extra careful that your card does not fall in the wrong hands.
• You should keep a close check on your purchases and deduct the transaction amounts of each purchase and reconcile your bank balance often.

Don't Confuse A Prepaid Credit Card With A Debit Card

Be careful that you do not confuse a debit card with a prepaid credit card. With a prepaid credit card, you pre-load your card at a specific location (or branch of the location) with your cash. You must put money on your card before you can use it because you cannot have a negative balance.

This type of credit card is especially appropriate if you want to keep close tabs on how much you are spending. And, if you give your children credit cards, this should be the preferred one.

Pre-paid credit cards are safer than debit cards since there are strict spending limits -- you can only spend the money that has been pre-loaded in the card. If the card were to be stolen, the criminal could only spend what's on the card at the time.

Whichever card you use, credit, prepaid credit or debit card, you will appreciate  convenience and ease in your purchasing transactions.

For information related to prepaid debit cards and related info, see:

Credit Card Services - Take Advantage of Offers
Credit History Report - Influences Your Financial Future
Eliminate Credit Card Debt - Several Ways Available
Credit Card Debt Consolidation - Manage Your Indebtedness
Free Prepaid Credit Card - Start Establishing Credit