Bad Credit Debit Card

A debit card requires a savings account or a checking account, just like a secured credit card. The bank will then issue you a debit card. Most debit cards carry the Visa or MasterCard logo and look and feel like a credit card. It can be used as a credit card in a store or online. For ease of use, there should be no difference.

Most of us know that traditional credit cards work by assessing your credit and approving you to obtain a credit line. Then you get the card, and you can charge all costs for free and pay monthly in the future.

If you happen to be someone with bad credit, it will be challenging to get approval from your credit card.

Prepaid debit cards work very differently. They are also referred to as prepaid cards or rechargeable cards. The difference is that the current account is directly linked to the debit card.

You have opened a financing account. An FDIC-insured bank usually holds it. Therefore, your money is protected, just like with a normal bank account.

However, they are not like traditional bank accounts. This bank is unlikely to be located anywhere near the state and city where you live. Also, you cannot make routine withdrawals from this account.

Instead, you get a debit card with the Visa or MasterCard logo, the limit of which corresponds directly to the amount you have invested in the account. This is why they are called prepaid or prepaid debit cards.

They look like regular credit cards. They can be used like normal credit cards. The main difference is that any charge or purchase is directly deducted from the amount you deposit into your account. The remaining balance in the account is also the limit reserved on the card. For example, if you sign up for the service and create an account by investing $ 300. Then you will immediately receive a debit card with a limit of $ 300.

Then, when you use the card to make a $ 50 purchase. On average, $ 50 will be deducted from your account, and there is another limit of $ 250 on the card. Then if you pay $ 25, the account balance increases to $ 275. Now you can charge up to $ 275 on your debit card.

There is absolutely no credit check. Everyone is approved. Because of the way prepaid debit cards work, they are forced to be used more responsibly. There are no costs for overdrafts or limits. If you try to charge more than the current balance, the purchase will be rejected.

Because prepaid debit cards have these characteristics, they are a good choice for people who know their credit reports are negative.

One distinction that advocates of consumer protection consider very important is the level of fraud protection. If a traditional credit card is lost or stolen, you usually only have to pay the initial $ 50 fraudulent charge. But debit cards don’t have this protection. Therefore, if the card is lost or stolen, you must contact them immediately to cancel and replace the card.

Here are some other pros and cons of using a debit card:


* Simple approval process, no credit check required, a simple solution for those with a bad reputation
* Accepted like any Visa or MasterCard
* Withdraw money from an ATM
* With routing and account number, it means you can easily set up direct pay slip deposit


* A one-time fee is usually required to create an account and activate the card
* As with using a credit card, cash is usually withdrawn when using an ATM
* Different fraud protections from traditional credit cards
* Some prepaid debit cards do not report your payment history to the credit bureau, so they will not help restore the credit
* Even if it looks like you are charging with your own money, the card company says it is an equal amount, but not the same amount. Therefore, there is interest in your expenses.

One thing to remember is that the prepaid industry is evolving, and competition is fierce. As a result, some companies have started offering more features that prepaid debit cards did not have before, such as overdraft protection, a certain number of free ATM withdrawals, fraud protection, etc. This checks the benefits of a particular card.

All in all, with a prepaid, prepaid, or reloadable debit card, you can only spend up to the amount previously stored in the existing account. If you tend to overspend or want to keep your spending under control, a prepaid debit card can be a good solution. This will help you manage your money better. For those with a bad reputation, they are also an excellent choice to obtain Visa or MasterCard.

We hope this information is useful to you and can help you determine if a prepaid debit card is right for you.