Prepaid Debit Cards - A Poor Man's Bank?

Prepaid debit cards are making a dent in the check cashing business. For years check cashing shops have served that part of the financial market that did not have conventional bank accounts. Pay checks, government checks and personal checks are all cashed for a fee that can range from 1.5% to 10% of the face value of the check. Typically people paid these rates simply because there are no conventional banks located in their community.

Enter the prepaid debit card. Both Mastercard and Visa have prepaid debit programs that have significant advantages over the traditional check cashing shop. Probably the biggest advantage is not having to carry around cash. If you have just cashed your weekly or bi-weekly paycheck, what do you do with the cash? Carry it on you? Hide it someplace at home?

With the prepaid debit card, your deposit is recorded and the card is the only thing you need to make purchases at a store, online, or get cash out of an ATM. Funding your card can be done by direct deposit or by reloading the card at one of thousands of stores that provide the service. There is no need to carry around more cash than you need. Because the debit card is using your own money and is not a credit card, there typically is no credit check and most persons are approved online immediately. Because there is no credit check there is no inquiry recorded on your credit report.

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