Prepaid debit cards are often thought of as only being tools for people with low incomes or bad credit, but in some situations, a prepaid debit card can provide benefits regular credit and debit cards can't. While you'll miss out on bonus rewards from credit card companies and possibly some buyer protections, here are some creative uses for prepaid debit cards you may not have considered.
1. Providing restricted spending
The Next Step MasterCard prohibits its use in liquor stores, casinos, tattoo shops, and other establishments. The card program was developed for recovering alcoholics, drug addicts, or even those with gambling problems to have access to money which couldn't be used to obtain alcohol, cash, or pay for gambling.
There are many people who might feel good about purchasing such a card for someone else. A card with such limits could provide peace of mind to parents and other family members who wish to send money to a college student who may have access to more temptation that the family would like. Knowing money can be sent to a loved one which couldn't be spent on destructive goods can provide a great benefit to the user and no guilty conscious or concern on the part of the sender.
Marketing-focused companies have found many ways to track consumer spending habits, and not just through grocery store customer rewards cards. Making purchases by credit card or even checking account-related debit cards can provide an enormous amount of data about spending habits, types of stores frequented, and geographical shopping regions of the cardholder and others who use the card.
Some of the data may be used to make future credit decisions or target certain kinds of marketing strategies, and for many reasons, some people simply prefer to keep their habits private. Anyone who simply doesn't want their credit card companies to know they purchase 80 bags of cat litter per month, an arsenal of rubber fetishwear, or several bottles of liquor per week can shop anonymously using a prepaid card.
3. Financial security
Many people use prepaid cards to provide an allowance for college students or to help themselves budget wisely, but prepaid debit cards can also be used to help an elderly or mentally disabled loved one stay on top of money.
Scam artists often target the elderly, knowing they may not be as savvy about ploys or their judgment may not be as sound as someone else. While having access to only prepaid cards may not stop a person whose judgment may not be sound from entering into a scam, it can greatly limit the damage. It can also put a limit on how much the person can spend if they're simply prone to forgetfulness.
4. Leaving fees overseas
If you've traveled abroad and been hit with hefty currency exchange fees after using credit cards abroad, then you'll be happy to know some prepaid debit cards don't charge any additional fees for foreign transactions. If you've been stung with fees which outweigh the perks and rewards, then using prepaid cards when traveling outside of the country may be right for you if buyer protection isn't an issue, particularly with consumables like food, drinks, travel expenses, and fees.
5. Prepaid budgeting
A prepaid card set aside to use for a vacation or large purchase can be a great way to save and stick to spending limits. For a vacation, money can be added to the card on a regular basis to save, and then when ready to travel, simply leave any other cards behind and stick to the budget provided by the prepaid debit card alone.
If other cards are available, it may be a good idea to leave one with a trusted person in the case of an emergency instead of taking it along. With good saving and planning, using a prepaid card can be a great way to have an enjoyable vacation without the credit hangover upon returning home.
Beyond debit cards
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