Prepaid cards have become a popular tool for consumers, but it's also a great way for employers to deposit paychecks and to give gifts. Even the Social Security Administration makes deposits with prepaid debit cards. Major credit card companies like Visa, MasterCard and American Express partner with prepaid debit cards as well so you can withdraw cash, pay bills, buy groceries or just purchase whatever you like. There are some advantages of prepaid card direct deposit to direct deposits through banks as well. As prepaid cards become more like regular banking every day, it's easier for anyone to get a prepaid debit card and start shopping.
Most people get started with a debit card through their parents. It's an easy way to deposit allowance for cards and allow them to keep track of their money. They can be used for online shopping as well. Most prepaid debit cards don't have overdraft fees as well, but you won't be able to select overdraft protection if you get close to negative in your account. You have to keep a close eye on debit cards to ensure that you don't go negative and that you're not charged fees. Prepaid debit cards must list their fees, and you can check these before signing up for a card.
Most debit cards also have banking tools. You can budget your money, see transaction history and even access mobile banking. It's becoming easier to make mobile deposits as well. As prepaid cards move closer and closer to offering banking solutions, the question is whether they are truly a good alternative.
The major drawback is that debit cards don't really add anything to your credit history. You are adding your own money, which means that you don't have any credit to build. If you need to write checks, you won't be able to do so with a debit card either, and there could be some high fees attached to ATM withdrawals and balance inquiries if you go out-of-network.