Either way, a prepaid debit card may be a viable option. In most cases, they can be used anywhere that major credit cards are accepted, but your total expenditures will be limited to the amount deposited onto the card.Searching for a better way to manage your money? Or maybe you’re tired of visiting your local check-cashing location to trade pieces of paper or retrieve a money order each time you need to pay a bill?

Either way, a prepaid debit card may be a viable option. In most cases, they can be used anywhere that major credit cards are accepted, but your total expenditures will be limited to the amount deposited onto the card. Furthermore, some will allow you to receive direct deposit onto the card and access cash on the fly via ATM withdrawals.

So, should you consider a prepaid debit card? Perhaps you should, if you meet the following criteria.


If you prefer not to carry cash, but need a way to get a handle on those wants or “miscellaneous” expenses, a prepaid debit card is a great way to get the job done. Simply load any disposable income onto the card, and once the balance reaches zero, that’s the end of your slush fund until you can replenish it. Fortunately, it can be reloaded at any time.

This App Makes Managing Your Finances Easy — Start Budgeting Today >>


Do you have a teenager in the house? Entrusting them with a debit card could mean trouble for your wallet. Why? If they swipe like there’s no tomorrow – even without your approval – the money’s gone forever. And if the account ends up in the red, prepare for an onslaught of overdraft fees.

But a prepaid debit card like the one from FamZoo will stop working the moment the balance hits zero. Even better, if your teen accidentally misplaces the card, the loss is limited to the available balance – unlike regular debit cards.

Unbanked Consumer

Around 10 million Americans fall into this category, according to NerdWallet. While some may shy away from banks to avoid excessive fees, others may have trouble opening a bank account at all. Either way, they may still need a piece of plastic, and that’s where a prepaid debit card comes in.

A Few Drawbacks to Consider

If you’re strongly considering a prepaid debit card, keep the following drawbacks in mind before moving forward.

Fees, Fees, and More Fees

Before purchasing, review the fee schedule. You may discover that the costs of being a cardholder exceed the benefits. Fees to be on the lookout for include:

  • Activation fee
  • Monthly maintenance fee
  • Transaction fee
  • ATM fee

Minimal Liability and Fraud Protections

Unlike major-brand debit and credit cards, most prepaid debit cards are not accompanied by the same level of consumer protections. This means you don’t automatically qualify for zero-liability fraud protection. Fortunately, you won’t be at risk of identity theft if your card is stolen since personal information is not tied to prepaid debit cards.

Protect Your Financial, Personal, and Social Identity — Choose Your Plan >>

Balance Forfeitures

Since the available balance on the card is derived from my earnings, my card must remain active until all the funds are expended, right? Well, not necessarily. In fact, some prepaid debit cards come with expiration dates. The issuer is not obligated to send you a new card once the current one expires.

Is a Prepaid Debit Card Right for You?

The answer to this question depends on what you’re trying to accomplish. If you fit any of the criteria listed above and simply want a piece of plastic that will function in the same manner as a debit or credit card, a prepaid debit card may be a viable option.

However, if you’re looking for a tool to help build credit, a secured credit card that reports account activity to the credit bureaus is a more practical alternative.

Build Better Credit Today With a Secured Credit Card — Apply Here >>

Finally, you should conduct a cost-benefit analysis to determine if the card is worthwhile and will best suit your financial needs. You may discover that a bank account with monthly maintenance fees is cheaper than what you’ll have to pay each month as a cardholder.

Opinions expressed here are not those of any partner bank, credit card issuer, hotel, airline, or other partner. This content has not been reviewed, approved or otherwise endorsed by any of the entities included within the post.