You’ve probably noticed that nobody (outside the food service industry) carries cash anymore. We’re a society set on plastic, and the credit and debit card has long replaced the days of paper currency. But there are still some choices, small grey areas in between paper and plastic worth considering.
The Debit Card
Obviously the most common choice for money exchange is the debit card. Debit cards are useful because they provide an easy way to store and exchange your money that is convenient for most cardholders. Debit cards are linked to a bank account and can even be linked to a credit card, should overage occur.
The most advantageous thing about debit cards is that they’re federally regulated, so you have a pretty clear idea about what will happen in case of loss or theft. The association with the bank also means that you can use direct deposit services and mobile banking to deposit money, making the debit card a relatively hassle-free option.
The Prepaid Debit Card
For a child or teenager developing financial literacy, the prepaid debit card can be a great option. Because the amount of money on them dictates exactly how long they can be used, there’s no chance of over drafting accounts. More money can easily be placed on cards, providing young adults with the opportunity to learn money management in a safe financial environment.
Prepaid debit cards sometimes allow direct deposit, and a few even have mobile apps to help you manage money! However, prepaid debit cards are not federally regulated and therefore are more risky if lost of stolen.
The Take Away
While both cards will likely be fine for a young adult, there are a few ways of determining if one is better for you. If you (or your loved one) is likely to lose a card, go with the debit card—your money is safer in a bank account. Going with a traditional bank account will also allow you to develop tenure with a particular bank—accounts started early sometimes stay with a person their whole life.
If you’re going to be traveling, a prepaid debit card (that doesn’t contain all of your money) is a great solution because is more hassle-free, should something happen. Prepaid debit cards are also a great solution for responsible teens and to be given as gifts.
Jason Hartman encourages finding the most effective (and safe) way to responsibly learn money management—try a few out, and see what is right for you! (http:[email protected]/5856795621/)
The Young Wealth Team