A debit card is similar in size and appearance to a credit card but is tied to a bank account. When used, the debit card withdraws money from the bank account to pay for the purchase.
In many ways a debit card is an electronic version of a check where the funds are transferred immediately.
Benefits of Debit Cards
Debit cards offer some significant benefits over their credit-based counterparts. Since they function as an instant check, they offer the convenience of a credit card without the risk of long-term debt. Unlike a check, there is no float time involved. The money is withdrawn at the instant of purchase. This means it is much more difficult to write a hot check.
Debit cards are often recommended for people who have trouble staying within their budget.
Prepaid Debit Card
A prepaid debit card works like a normal debit card, but the fund come from a pre payment instead of from a bank account. In essence, the card has its own special purpose bank account and money can be loaded into that account. This offers advantages when someone wants to give someone a debit card with a fixed limit instead of giving them unfettered access to the total contents of their bank account.
Because of this, prepaid debit cards are popular as gifts. They are also sometimes used by privacy advocates who are concerned about the amount of data being passed around as part of debit card or credit card purchases. A prepaid debit card can be purchased with cash and used without being associated with a name or address.
prepaid debit cards can be purchased from a number of stores in the checkout aisle. There is often some type of fee to get the card and may be fees involved in loading additional money onto it.