here are many reasons why people acquire a prepaid or reloadable debit cards. Many businesses prefer to pay their employees electronically. Direct deposit lowers payroll distribution costs. Employees are free from having to leave work to cash theirpay checks and pay fees to check cashing establishments. Many people can’t open a checking account because of a banking issues that have been reported to ChexSystems or Telecheck. The new breed of debit cards are issued with out a credit-check. The issuers are banks that use Visa and MasterCard debit and they (debits) are accepted just like a credit-card even though there is not a credit line attached. This limits overspending and is an additional cure for spending money you don’t have. Some debit cards can only be used as a private label ATM, however the Visa and MasterCard debit card can be used to get funds at ATM machines as well as for online shopping and bill paying.
Some folks like to get a prepaid debit card for a student or teen. This allows safe and effortless money transfers. Funds can be transferred from one debit card account to another by telephone or online, depending on which bank you choose. Another advantage of using a debit card is to track expenses. Some debit cards have rewards options or incentive offers.
I have had clients that have family members that reside in other countries. Funds can be deposited in your account provided by the debit card company. The family member abroad can access the money using the Visa, Mastercard or ATM card that is issued. This is common place for family members in Mexico, Central and South America and Canada. Envio (money transfer companies that operate in Central America) companies here in Los Angeles charge as much as $15.00 per hundred dollars to send money to other countries.
I wouldn’t recommend off shore pre paid debit card issuers because there is little recourse if they close or move as far as getting your money refunded. There may be astronomical costs for a simple phone call to customer service, if you can reach them at all. Be safe, bank and trust your money with an American bank!
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What is the difference between a debit card and a credit card?
Debit cards are also referred to as check cards. Debit cards look like credit cards or ATM (automated teller machine) cards, but work like cash or a personal check. Debit cards are different from credit cards. A credit card allows you to pay later, with a debit card your money is deducted from your checking or savings account.
Debit means “subtract.” When you use a debit card, you are subtracting your money from your own bank account. Debit cards allow you to spend only what is in your bank account.
Credit is money you borrow from a bank or other financial institution. The amount the issuer allows you to use and the interest rate is determined by your credit history, income, debts, and ability to pay. You may use the credit with the understanding that you will repay the amount, plus interest if you do not pay in full each month. You will receive a monthly statement detailing your charges and payment requirements.
What you should know about debit cards:
- Obtaining a debit card is often easier than obtaining a credit card.
- Using a debit card instead of writing checks saves you from showing identification or giving out personal information at the time of the transaction.
- Using a debit card frees you from carrying cash or a checkbook.
- Using a debit card means you no longer have to acquire traveler’s checks or cash when you travel.
- Debit cards may be more readily accepted by merchants than checks, especially in other states or countries wherever your card brand is accepted.
- Returning goods or canceling services purchased with a debit card is treated as if the purchase were made with cash or a check.
Tips for using debit cards
- Report the loss or theft of your debit card immediately to your financial institution.
- Fraud happens! Check your statement and report any suspicious activity to your financial institution.
- Keep your receipts from all your debit card transactions. A thief could get your name and debit card number from a receipt and order goods by mail or over the telephone. Your card does not have to be missing in order for fraud to occur.
- Protect your PIN number, memorize it. Don’t write the number on your card or keep your PIN number with your card. Don’t choose a PIN number that a smart thief could figure out, such as your phone number or birthday.
- Keep in mind how much money you have available in your account. Don’t forget that your debit card may allow you to access money that you have set aside to cover a check which has not cleared your bank yet.
What if my debit card is lost or stolen?
Just as your money may be stolen and your credit cards may be lost or fraudulently used, a debit card may be lost, stolen, or used without your knowledge. As a cardholder, you need to know the extent of your protection.
Government regulations require debit card issuers to set a maximum liability of $50 if the debit card is reported lost or stolen within two days of discovery. Liability increases to $500 if the lost or stolen debit card is reported within 60 days. Neglect to notify the bank of the theft within 60 days after a bank statement is sent, and you could lose everything in your checking and overdraft accounts.
Check with your financial institution about your liability. Many issuers offer consumers better protection than what is required in government regulations. One type of check card offers consumers “zero liability” in cases of fraud, theft, or other unauthorized card usage if reported by the cardholder within two business days after discovery. After the two-day period, the cardholder could be liable for a maximum of $50. Some other cards limit consumers’ liability for fraudulent use of stolen debit cards to $50.
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