The Ultimate Guide to Prepaid Debit Cards

The prepaid debit card industry has experienced dramatic growth over the last several years thanks to its increasing affordability and convenience. Center for Financial Services Information manager Thea Garon predicts that this trend will continue, especially among millennials. Garon goes on to suggest that millennials and other generational members will see the lines blur between traditional checking accounts and prepaid debit cards.
A Pew Research study revealed that about 12 million Americans use prepaid debit cards. They cite multiple reasons, from the desire to stay away from big banks to the potential for improved savings. Many of them have access to traditional bank accounts, but they choose prepaid instead. The stigma that used to surround prepaid card usage has dissipated as more consumers have chosen them over traditional options.
How Does a Prepaid Debit Card Work?
If you′ve ever seen a regular debit card, you know what a personalized prepaid debit card looks like. It features the owner′s name, the card number, the expiration date, and other familiar details. You can′t distinguish them from other cards, and they work just the same.
When you want to buy an item online, you′ll enter the card information on the checkout page. Include the security code on the back of the card, if applicable, as well as any other requested information. When you select the ′buy′ button, the transaction will process, and the merchant will take the money that you′ve loaded onto the card.
The process works just the same at retail locations, except that you′ll either hand the cashier the card or use the card machine at the point-of-sale terminal. Just swipe the card or insert it (if it comes with a chip), and the purchase price will be deducted from your balance.
Of course, before you can make a purchase, you must first load money on your card. Plenty of cards let you do so online; alternatively, you may add cash to your card in a store or at a financial services institution. When you put money on the card, the total amount becomes your balance. You can spend up to that amount before you have to reload your card with more money.
You can also use your prepaid debit card to set up direct deposit. When your payment provider processes your paycheck, the money will get automatically transferred to your card. The same goes for your IRS refund check. Just use your direct deposit info when you process your return so the money gets loaded onto your card automatically.

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