Are Prepaid Debit Cards a Budget Tool or a Bust for Chicago Consumers?
Imagine that you could set a spending limit for your credit card - when you reach the limit, it simply stops working. Sounds like a great way to stick to your budget, right?
Many consumers are doing just that with prepaid debit cards, the reloadable Visa, MasterCard, American Express, or Discover cards you can buy at the grocery store or drugstore, according to a story on MSNBC.com. Shoppers trying to save money like how the cards help control spending, can't harm their credit, require no minimum balance and come with no bank fees. Unfortunately, that doesn't mean they come without any fees - quite the contrary, say Chicago bankruptcy attorneys.
In fact, the hidden fees attached to prepaid debit cards might not be worth the convenience. It's common to be charged a dollar or so for each purchase you make. Maybe that's no big deal if you're using the card to stick to your budget on larger buys - say, your weekly grocery shopping. But if you're using them for every little purchase - like lunch or a cup of coffee here and there - those fees will add up fast. And those aren't the only costs.
Prepaid cards can cost between $3 and $20 to activate, according to MSNBC. Monthly fees just for keeping the card range from $3 to $10. Want to know how much spending money you have left? Each balance inquiry could cost up to a buck. Stopping use won't even save you money - some cards come with a dormancy fee. And unlike a credit card, prepaid versions don't necessarily come with terms of agreement to alert you to these expenses.
If you don't have a bank account, using a prepaid debit card might be cheaper than using a payday loan center - but you're still far better off just opening a free or low-cost checking account. As for those of us hoping prepaid cards can help us save money, there's a better way. By lowering debt, you break your reliance on credit cards and start freeing up more cash to pay the bills each month - so you can stick to your budget without the help of credit issuers. Find out if bankruptcy can improve your financial situation with a free personal debt analysis courtesy of a Chicago bankruptcy lawyer.