Plan your spending with prepaid debit cards

August 09, 2017
Some financial advisors will tell people who have trouble sticking to a budget to switch over to cash. This may help them physically see how much money they have left to spend for the month.
Plan your spending with prepaid debit cards

These days, however, it is impractical to rely only on cash. Prepaid debit cards are a much better tool for tracking and organizing spending and sticking to a monthly budget. Also, prepaid cards can be used to pay bills and make purchases online.

Here is what you need to know to make prepaid debit cards work for you.

A natural backstop on spending

Prepaid debit cards can be reloaded. However, when the balance reaches zero, you will no longer be able to use the card. In this way, prepaid cards work much like cash. Of course, you will need to track your spending (online or on your own) so that you know how much you have left. Some cards offer to send you a balance report every day via text or email.

Different cards for different purposes

Because prepaid cards do not require a credit check, you can get as many as you need. You will need to pay attention to fees associated with these cards, but there are ways to avoid these extra charges if you plan carefully. If you can get fee-free cards, you can use one for bills, one for food shopping, one for entertainment, and so on. In this way, you can fund different parts of your budget easily without having to track spending.

Use cards for saving as well as spending

Perhaps you want to save for a vacation or a major purchase. You can use a prepaid card account to hold the extra money that you save each month. Once you reach the desired amount, you can use the card to make your purchase. Then, you can start saving for the next splurge.

Other things to consider

Prepaid cards are not the best option when it comes to unexpected expenses. If you have to make a major purchase that is not part of your budget, consider getting an online personal loan. This will keep you from having to make an extra deposit into one of your prepaid accounts. It will also keep you from having to use a credit card.

The other thing to remember with prepaid cards is that they have maintenance fees. Occasionally, you can get around these fees (by setting up direct deposit or using your card a certain number of times each month). You should always be on the lookout for these extra fees.