Everyone, including university students, wants and needs credit cards and debit cards. But there are times and circumstances when prepaid debit cards make sense. Not only can they help you with managing your money, but they also have the potential to protect you from fraud and identity theft.
You can get prepaid debit cards at banks, retail outlets, and online. You will usually pay a small fee at the time of purchase, but the cards will be reusable. It may be worth it to have one or two available so that you can use them as needed. For some students, they may be the only alternative available.
What are the times when prepaid debit cards are good to use?
If You Don’t Trust Yourself With A Credit CardIf you have any concerns that your credit card use will ultimately land you in a debt trap, prepaid debit cards may be the way to have some sort of card for purchases where necessary, without risking running up a balance.
Since you can spend no more on a prepaid debit card than you paid into it, there’s virtually no chance of going into debt on it.
Prepaid debit cards can also be an option if your credit situation does not allow you to obtain a credit card of your own. That seems unlikely, but some students are in the unfortunate position of already having poor credit, or lacking a cosigner with strong enough credit to enable them to get credit card.
When Making A Foreign Purchase
If you’re making a purchase in a foreign country – whether you are doing it online, or while you are on vacation in that country – a prepaid debit card could remove the risk of identity theft.
Related: The Lazy Miracle of Online Shopping
You can buy or recharge a prepaid debit card without keeping important personal information on file anywhere. The account number listed on the card is attached to the card, but not you personally. There’s no chance that a would-be thief would be able to steal your identity based on any information connected to the card.
When Giving Gifts
How many times have you needed to purchase a gift for someone, but had no idea what to get them? And if you have no idea where they like to shop, getting them a merchant gift card might be out of the question too. Prepaid debit cards to the rescue!
Prepaid debit cards have two advantages when it comes to gifts:
- Since they are generally issued by Visa, MasterCard, and American Express, they are good at any vendor who accepts those cards, and
- since they are cards, it’s very easy to stick them in a greeting card and mail them with regular postage.
There is no need to fret over exactly what gift the person will want, to have to wrap it up, and run to the post office to mail it with exact postage. The card will be welcomed by the receiver – since it can be used anywhere – and your gift giving experience will be hassle free.
When Making An Online Purchase To A Vendor You Don’t Necessarily Trust
If you would like to make a purchase on a website you are not familiar with, a prepaid debit card could be an excellent way to do so without concern for identity theft. It is unfortunate but true, that there are websites out there that exist strictly to gather personal information for the purposes of theft. If you are worried about that possibility, a prepaid debit card may enable you to make a test purchase on the site.
Related: Six Online Shopping Safety Tips
And depending upon the issuing company – Visa, MasterCard, American Express or Discover – you might have certain purchase protections available to you. Check with each card issuer to find out what those protections are. At worst, you’ll be out no more than the amount of money that you have on the card. And that is a lot better than full-blown identity theft!
If You Cannot Open A Bank Account
If you are unable to open a bank account – perhaps because of problems with a previous account – prepaid debit cards may be the best way to have a name brand card that you can use. Unfortunately, not everyone accepts cash anymore, so you’ll need to have a card even if you don’t have a bank account attached to it.
Some situations where you’ll need a card include:
- Online purchases
- Car rental and hotel reservations
- Airline ticket purchases
- Gas stations (paying at the pump)
If You Have Been A Victim Of Identity Theft, Or Worry That You Might
If you have already been a victim of identity theft, you may need an interim solution for using a card. Since your old accounts will have been closed out, and it could take many months to resolve an identity theft situation, prepaid debit cards could be an excellent temporary solution for you.
They can also be a valuable tool if you are concerned with identity theft. The less that you use your credit or debit card, the less chance there is for being a victim of identity theft. A prepaid debit card can be part of the strategy that reduces the number of times that you use identifying cards, like credit and debit cards.
Do you make much use of prepaid debit cards? Have you thought about any of the advantages above?