Prepaid Debit Cards

We all are aware of debit cards and credit cards. But we all have a tendency towards overspending with both of them. People prefer higher credit card limits as having lower limits may not seem practical as they have greater interest rates. So keeping track of spending becomes difficult and they end up spending a lot. Debit cards are linked to your bank accounts which may have huge savings which people tend to spend directly from. Since we have a lot of money in our savings, we might end up buying things without keeping track and end up overspending and losing hard-earned money. Spending is inevitable but we have to keep track of it and make sure that we do not end up buying things we do not need and cannot afford.

But since both the cards have the problem of visualizing the amount of money being spent and makes it hard to track, what can be the solution? If only there was a way where we pre-determined the amount of money we would want to spend and kept it apart so that it becomes impossible to spend more than this amount?

This exactly is the function of prepaid debit cards. Here you put predetermined money into the spending account of the card and use the card to pay your bills. Since the card is prepaid, you exactly know how much you are allowing yourselves to spend and because of it being prepaid, you cannot spend more than your predetermined limit, the amount of money which you have you have loaded onto the cards.

That was simple and now you know what a pre-paid card is. Let us now look into why you should consider this even if you are comfortable with the options of credit and debit cards.

Pros and Cons Of Using Prepaid Debit Cards

The card has the following pros:

  1. You will not owe any bill after you spend the money like in credit card. You have preloaded the money on to the card which is yours.
  2. You do not need a bank account like in debit card to buy a prepaid card.
  3. Your credit score is not adversely affected for using the prepaid card as you do not have the obligation or a monthly date for paying for the card bill and interest, and do not have to bother about the deadlines.
  4. You won’t over spend and it is easier to stop yourselves from over spending.

So these were the reasons you should consider prepaid cards as your go-to option.

But there are some disadvantages which you have to look at as well and check if they would really affect your spending traits and become hurdles.

The cons are:

  1. If you are disciplined with your money and bills and take deadlines seriously, then it would be impractical for you to take up prepaid cards. It has very high fees irrespective of the amount you load on to it.
  2. You have to add money to the card each time you have utilized the value on it completely. If this transaction rises above certain number of times in a given timespan, like a month, then you incur high fees and additional charges.
  3. These cards are not widely accepted yet and you might find it a problem if you travel a lot.
  4. Can become a problem in case of emergencies when you need amount greater than your regular expenses like medical emergencies, etc.
  5. You cannot convert value on the card into cash like you can do it with debit card at an ATM.


We suggest you make usage of cards in a mixed way. Since emergency situations are rare, you can have a prepaid card but emergencies are inevitable and can happen at any point in time and catch you unprepared. To maintain a credit card as well but do not use it for regular spending. Prefer prepaid cards. Maintain a debit card as well just if need liquid cash in hand. Do not use it for regular spending or shopping as it is linked to your savings account and you may end up drying up the funds. Make use of prepaid cards for regular spending but maintain both the cards to address the problem of tracking and limiting your financial expenses and make sure you do not overspend. As your spending habits improve and you get used to not spending more than required, you can do away with your prepaid card.

Happy and responsible savings!