Can You Budget Smarter and Keep Finances under Control with a Prepaid Card
While nearly every financial “expert” out there seems to go on and on about the importance of sticking with a budget, and with nearly all of us agreeing this is important, we all have to admit that sometimes we fall short of sticking with our budgets. Even the most frugal people in the world have weaknesses, and may find themselves spending too much on eating out, pursuing hobbies or simply overspending sometimes. When these types of spending sprees get too out of control it can be difficult to reach your long term financial goals.
If this all sounds like doom and gloom, remember that you are not alone. Millions of consumers all over the country have a hard time getting their spending habits under control. The traditional method of putting extra money aside and accounting for every penny spent and earned just does not work for everyone.
There is another way to keep your spending under control – prepaid cards! Reloadable debit cards can empower some folks with the money management skills that they need to keep their spending on the straight and narrow. Remember, prepaid cards are not like traditional debit cards, which are connected to your checking account, with all the funds in that account at their disposal.
A prepaid card begins with no balance and you control how much money goes in by “loading” the card with money that you will use to make purchases, pay for meals and to take care of any expenses you choose to tackle. Once the prepaid card reaches a zero balance, you can no longer make any purchases. These cards effectively work as a stop-gap against overspending, and allow you to set your own, personal limits on how much discretionary spending you do on a monthly basis. It is easy to figure out how much you usually spend and need as “walking around” money. You simply load the card up with that amount when you have the money, and you are all set.
When you use a credit card for this type of spending, it is easy to wind up over your head in debt. When you use your bank debit card, you could spend too much and wind up with expensive overdraft fees. And when you use cash, it is often tempting to spend too much and to keep hitting up the ATM for more. With a prepaid card, once your funds are gone, you are done spending.
Prepaid cards are not the ideal solution for everyone. But for people who can’t seem to stick with a self-imposed budget using other financial products, they may be the missing piece of a successful spending plan equation. These types of cards even offer online tools and apps that you can use to track your spending and to see how much you have in your account. Remember, though, that prepaid cards will not earn any interest on your money. Therefore, a prepaid card should not be used to replace a savings account that allows you to accrue interest on the money in your account. Other than for daily discretionary spending and maybe spending on a vacation, it is probably better to stick with other alternatives.
If you have tried and tried to get your daily/weekly/monthly spending under control, a loadable, prepaid debit card may prove to be a valuable tool that will help you to keep your finances on track. Consider trying one for a while. If it works for you – great! If it doesn’t work for you – it is easy enough to get the card to a zero balance and then to switch to another method of budgeting your cash.