Pros and Cons of Using Prepaid Debit Cards

by Mike | Posted in Money Management | 6 Comments


Recently, I read a report about prepaid debit cards and their use. I was surprised to learn that more than 60 million Americans are using this alternative to a bank checking account. And most surprisingly, prepaid debit cards are not only used by people with poor credit. In some cases, it is the best way to manage your money with the lowest fees.

In order to better understand them, I decided to list the pros and cons of using prepaid debit cards:

Prepaid Debit Cards Pros:

Good to help manage your budget

The very first advantage I can see is that they are very useful to help manage one’s budget. If you credit $1000 to your card, there is no way you can’t spend more than that! Therefore, you can establish that you should be able to live with $1000 per month and pay everything with your card.

Control fraud damages

Since I work for a bank, I can tell you that it is way more complicated to get a refund as a victim of fraudulent use of your checking account than if your prepaid debit card or credit card gets stolen! Another good point is that the thief can’t spend more than what is on your card.

Easy of use

Prepaid cards are widely accepted anywhere. Therefore, it is as convenient as paying with your credit card… except that you don’t have to pay interest on your purchases!

Confidentiality

If you are afraid of identity theft while shopping online, prepaid debit cards can be one of the best ways to do your shopping in a secured fashion. Since there is no personal information stored on the card, you have less risk of being part of an identity theft nightmare.

Prepaid Debit Cards Cons:

Fees, fees and fees

Even if the recent study from Breton Woods showed that some people can save money using prepaid debit cards compared to regular checking accounts, there are still a lot of fees attached to them.

You usually have to pay to obtain an account (the card itself), to load it with money (and reload it as needed) and there may also be cancellation fees. Therefore, for someone who does a lot of transactions, it might not be the best way to proceed.

No or limited reporting to credit bureaus

Prepaid debit cards were once created to help  individuals with poor credit ratings. Since they couldn’t get access to a credit card, this alternative was good enough to offer access to the world of capitalism.

However, prepaid debit cards are usually not reported to the credit bureau. Therefore, you can’t use it to rebuild your credit history.

Original ways to use it

I have found 2 original ways to use prepaid debit cards:

Use it to give an allowance to your children

If you want to show your kids how to better manage money, this could be a great way to show them how money can easily be spent or saved. While giving an allowance through a card can be expensive for the parent, the child will have a real tool to become financially responsible…

Use it as a gift card

Gift cards will always be heavily debated topic when it comes to offer a nice gift to someone you appreciate. While gift cards are not the most original gift of all, the prepaid debit card has the advantage of providing money without a limited range of stores. The person can buy anything they like.

Your take: do you use / like prepaid debit cards?

I personally don’t have one so I was wondering if you had one and how you use it?

image source: the consumerist

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10 principles for saving time Part II

by Stew | Posted in Career | 5 Comments

On Monday, I shared the first five of ten money saving principles that I learned from my father. I say “learned” because while I remember them intellectually, I still struggle to apply them consistently.

6. Do it when you think of it.

This is the one that gets me most of the time. My dad developed a discipline in his life where he would take on a task almost as soon as he thought about it. There have been many occasions when he and I set up a time to do a particular job together and he would have it done by the time I showed up. Also, there are instances when he goes a little overboard, like when he starts vacuuming the living room floor when there is company in the house . . . or makes an important phone call during supper . . . The instinct to resist all procrastination is strong within him.

7. Arrive early

This is one that I “got”. My dad taught his children that “on time” meant at least five minutes early. It is a relaxing way to live and when last minute trouble rears its head, a couple extra minutes never hurts. The habit of punctuality is a strong one in our family. I often get texts from my brothers or sisters who are waiting for someone who is late. I once worked a job that was thirty minutes from where I was staying and I had to be there at 6 am or I would miss the transportation to the jobsite. One particular day, I was pulled over for speeding, the officer spent at least twenty minutes filling out the ticket and I still made it to work on time. Don’t ask me why I was speeding when I was twenty minutes early . . .

8. Assess the impact of wasted time

My dad was always keeping track of wasted time and telling us stuff like, “If a teacher wastes five minutes every class period, that is the equivalent to 75 hours a year” or something similar. He preached those principles and then lived them.

9. Get your work done, then play.

This goes to principle #8, when he was in charge, we never wasted a minute in class or on the job site, but if we finished early, we enjoyed our extra time. I remember fishing trips or spontaneous hikes in the woods that we would take at a moment’s notice – as long as we were far enough ahead on our studies. Sometimes when I was growing up, I would purposefully put off my homework simply because I knew it irritated my him so much.

10. Never take anything home

This is the one that I did not appreciate until I had my own children. At various times during his career, my father taught three or four elementary grades in one room or five or six different high school classes during the course of the day and rarely, if ever, did I see him bring his work home. Home was for odd jobs around the house and spending time with his family. His frenetic pace at work allowed him to relax at home.

Even though the principles of time management are simple, I have rarely met anyone who uses time as wisely as my father. Most of us will never get to that level, but maybe there are just a couple of principles that you can chose and work on. Personally, I am going to focus on #’s 3 and 6 in the coming year.

Article by Stew

Photo by Dave-F

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What I Like So Much About Making Money Online

by Mike | Posted in Money Management | 3 Comments

A while ago, Larry wrote a very interesting post about how to start an online store. He well defines the right way to start your online store. I also share his point of view on making more money in order to pay back debt faster. While reducing your expenses is always a good budgeting exercise, you still have to stay alive and hopefully enjoy life along the way. To me, this is where online income comes into the equation.

While my main job is used to pay for living expenses and the mortgage, my online income is used to pay back the loan from my parents (due in November 2010) and to give my family the opportunity for my wife to stay home and take care of our 2 children.

Compared to other alternative sources of income, online income is my favourite for many reasons:

#1 It requires little to no cash down to start

As mentioned in the above mentioned article, starting a website doesn’t require much money. If you have a computer and internet connection, you can setup your first website with a budget of $100. You won’t get the latest technology and your website won’t include animation and flash applications, but you don’t need those to make money on the net!

#2 You don’t need to have something to sell!

Since you can sell goods through affiliate programs, you don’t have to invent a product or maintain an inventory. You don’t even have to take care of shipping! Being an intermediary may reduce the amount of profit compared to being the manufacturer yet it reduces your input to the minimum.

#3 It’s easy to get paid

Another great thing about online stores is that you get paid instantly. Merchant credit card processingservices allow your business to process debit and credit card payments for orders made through the internet and/or a physical location, such as or PayPal.

So within a few seconds, your merchant account shows the money earned and you can easily transfer it to your regular bank account within a few days.

#4 Your online store works while you don’t!

Websites are one of the very few businesses to be open 7/24/365 without having to pay for someone to run the business while you are sleeping.  ;-)  It is not rare that I wake up in the morning and I realize that I just made $50 while sleeping. It is important to spend time building your “little money making machine” that works without your daily input. You have to maintain the website and make sure everything runs smoothly, but this doesn’t require you to work all the time on your website while you can make sales any time of the day or night.

Unfortunately, nothing is perfect…

While many people write about how they make so much money on the net, making money online is far from being easy. Since anybody with a computer can be a competitor, there are a lot of people trying to get a share of the pie. Therefore, as is the case for any other type of business, you need to work really hard at first before making your very first dollar.

I remember when I started my first blog; it took me a good 6 months of work before making my first $10 of profit. For the first 18 months, if I would have divided my monthly income by the hours I had worked, my hourly rate would have been equal to kids working in sweatshops.

However, the thing I really like about the online business model is that your efforts create exponential results. At first, you don’t really feel it but at one point, the effort of one hour work is multiplied by 10 through the power of your websites.

Then again, even if it’s part of a new economy, Web 2.0 requires the same thing to succeed as any other kind of business: talent, determination, perseverance and a lot of work!

Author: Mike.

Image source: Don Hankins

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10 principles for saving time Part I

by Stew | Posted in Career | 6 Comments

I am not an expert in using time, by any means, but I am committed to improving my time management. There is a famous adage that says “time is money”. That saying is just about always true and if there are not monetary rewards for saving time, there are certainly relaxation and family rewards for redeeming our time.

The person whose time management that I most admire is my father. Sometimes my brothers and sisters and I joke that he gets more done in thirty minutes than the average person accomplishes in an eight hour workday. Except it isn’t really a joke. He is probably the most efficient worker/administrator that I have ever observed. I thought I would share ten of his time habits this week. Five today and five more on Wednesday.

1. Work Ahead

Last minute problems should never prevent you from keeping your word. When my father was a school teacher, he always returned corrected papers on the next school day without fail. Even on days when his children were born, corrected papers were returned the next day because he graded them at the first possible opportunity. It is difficult to finish work on time, it is infinitely more difficult to discipline oneself to work ahead consistently.

2. Always push a little harder at the end

When I was young, my dad supported our family by working as a contractor in the summers. He taught for small, private Christian schools that usually could not afford to employ him year round.  Most people’s effort tends to trail off as a break time approaches,but  not dad. I always remember hearing him say to “do a little more” right before lunch or before it was time to go home at the end of the day.

3. Delegate

Even though my father worked hard, he did not think he had to do it all by himself. He was good at investing responsibility in others, motivating them to get the job done and then holding them accountable. If you learn how to organize people, you can save time by multiplying your efforts.

4. Learn to use technology

My father is quite a bit older than I am (naturally), but he is always informed on the latest technology. He is certainly not a “techy” or a “geek”, ,but whenever he gets a new computer or cellphone or software, he takes the time to actually read the manual so that he knows how to use it. Using technology to its fullest potential saves time.

5. Do it better the next time

My dad was always looking for ways to improve our processes and he was open to considering new ideas when it came to getting the job done. Sometimes we waste time when we resist change.

Stay tuned for five more time-saving and ultimately money-saving tips on Wednesday.

Article by Stew

Photo by Dave-F

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Friday Gathering: Post-Valentine’s Day Edition

by Stew | Posted in Friday Gatherings | No Comments

Gather Little by Little was featured in four carnivals this week!

What will you do with your tax refund? was featured at the 244th Carnival of Personal Finance. Boy, that thing has been around for a while.

Investing Baby Steps #2: Different Investing Strategies for Beginners Part 2 was chosen as an Editor’s Pick at the 104th Money Hacks Carnival.

If you can’t handle $5, why should I give you $10? was included at 217th Festival of Frugality and the Carnival of Money Stories.

Here are some other articles that I found interesting this week:

Bible Money Matters posted, Is math the king of the financial jungle? Albert Einstein was fascinated by compound interest, I was a math major in college and I enjoyed this post.

My wife and I have become big fans of Craiglist. I always thought Craiglist was a pretty simple site, but I guess not. There is a book about it and Lynnae reviewed it.

Moolanomy asked, Could you survive without money?

That’s the list – have a great weekend! Don’t just spend money, spend time with family.

Article by Stew

Photo by blmurch

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