A prepaid debit card works in the same way as a credit card, just in the opposite direction. Instead of purchasing something on the credit card and then paying it off later, you pay it off first and then make your purchase.
According to Fool.com, there are a number of creative ways in which you can use a prepaid debit card:
1. Skipping the fees overseas
Credit cards can attract heavy fees when you use them abroad. On the other hand, some prepaid debit cards don’t cost you extra for making a transaction overseas. For travel, a prepaid card could be the better option.
2. Anonymous shopping
When using your credit card, companies can track your spending and collect data to make future credit decisions easier and to help with their marketing strategies. If you want to eliminate spying by your credit card company, a prepaid card offers you anonymity.
3. Limited amounts
As a prepaid card has only a limited amount on it, getting one can be an ideal way to counter reckless spending. They are also a good option for those on a limited budget who may not be able to always make sound judgements. For example, an elderly person who is often forgetful. It may also help limit the damage to them if they are a victim of fraud or a money scam.
