Pre-paid debit cards can be debited with cash and used later on to make purchases like any common credit card. Pre-paid debit cards do not involve any kind of debt as in the case of credit cards and they are not attached to any checking or savings accounts. Financial institutions that issue these stored-value cards receive a number of fees in return for the offered service. Like credit cards, pre-paid debit cards have the holder’s name imprinted on them and can be used to withdraw cash at ATMs or sign for a purchase. The account can be replenished by depositing more money.
Pre-paid debit cards issuers are usually promote these cards to low-income consumers, employers and travelers. Pre-paid debit cards offer some benefits to low-income consumers as it is an easy and safe way to make payments including online purchases that need some sort of plastic. Some employers replace paper paychecks with pre-paid debit cards as a more economic way of delivering a regular payment. Finally, some travelers find pre-paid debit cards a convenient means of payment they can use instead of traveler’s checks. Most of the time, the full balance will be replaced in case of a stolen or lost card while the holder’s identity and personal information remain intact since there are no links to any bank accounts.
A pre-paid debit card consumer should be knowledgeable of the fees charged in many occasions of card use. Frequent pre-paid debit card use can be very costly as most of the time the following services bear a cost assumed by the holder: card activation, signature purchases, monthly statement issuance, funds loading and reloading, monthly maintenance, ATM withdrawals, balance inquiries, refunds, card replacement, customer service etc.