While there are several benefits to choosing a prepaid phone plan, there are still a few major differences and exceptions that you should be aware of. Prepaid cards generally can also be used https://www.adprun.net/ to withdraw cash from ATMs, but fees may be charged. To use your prepaid card at an ATM, you’ll create a four-digit personal identification number (PIN), like you would with a debit card.

Manage money better

A prepaid debit card only lets you spend the money you’ve loaded onto the card. That’s because prepaid plans don’t often come with the kind of benefits postpaid cell phone plans offer. That said, some carriers — notably, Metro By T-Mobile — do work in a few perks, so be aware of those when picking your plans. If you decide a prepaid debit card would work well for you, first consider how you plan to use it. Depending on how you want to load it with money—by direct deposit only, for example, or with cash—search for cards that make that method as easy and low-cost as possible.

Are prepaid cards safe?

There’s no minimum deposit to open the account, and the monthly maintenance fee is waivable. Plus, unlike many competitors, Truist doesn’t charge cash reload or inactivity fees. If you worry about the ability to make regular payments on a contract, a prepaid plan can offer a less stressful alternative. This means you can not only purchase mobile services from your provider, but can also include the price of a smartphone in your contract that is spread out over the term of your plan. Some prepaid carriers caution that their parent networks prioritize their own customers over prepaid services when networks are congested.

Advantages and Disadvantages of No Contract Phone Plans

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What kind of fees do prepaid cards charge?

While prepaid phones offer many advantages, they also can present problems for their users. Depending on your usage patterns, you could end up with a higher cost per minute, a serious disadvantage for anyone who makes a lot of phone calls. You buy a cell phone with a set service (amount of data usable over a certain number of months). If you go over your data limit, you can buy more minutes immediately or within a time limit. Here’s more information on how to get a prepaid debit card and how they work.

Parents who want to give their kids a limited amount of money can also opt for prepaid cards. Most debit cards are relatively basic, meaning you won’t earn rewards like a credit card. However, the Discover® Cashback Debit Checking provides 1% cash back on up to $3,000 in debit card purchases each month. Debit cards work similarly to cash, where you can’t spend more money than you have in your account unless you’re enrolled in overdraft protection.

Downsides of prepaid debit cards

Prepaid debit cards can be used much like regular debit and credit cards, to spend in person and online, and make cash withdrawals. However, prepaid debit cards are usually linked to a particular account you’ll need to top up — which doesn’t have to be your primary checking account. If you need to build credit or have been denied a bank gross profit definition account, a prepaid debit card might not be the best option. Secured credit cards help build credit, and if you can’t get a regular checking account, try second chance checking. These accounts provide another shot at mainstream banking and its perks. Unlike debit cards, prepaid cards don’t need to be linked to a checking account.

1. The age requirement for adding authorized users varies by card issuer, but many like Citi and Chase have no minimum age requirement, while others like American Express start at 13.
2. If you decide a prepaid debit card would work well for you, first consider how you plan to use it.
3. CreditWise from Capital One shows you key factors that may impact your credit scores.

And because you don’t need a credit check to buy a prepaid card, they’re more accessible than credit cards. This means they can be used by young people or those who want to avoid borrowing money and accruing debt. The best prepaid phone plans put a hard cap on your monthly cell phone bill so that you always know what the cost will be.

Like most credit cards, be aware of any fees you may face with a secured credit card, such as annual fees or processing fees. When we research the best cell phone plans overall, we’re also looking at prepaid plans from carriers big and small. That means considering price and data as well as whether your data might be slowed if there’s a lot of traffic. We also look at what happens to your service when you use up all your data in a given month. Using that criteria, here are our picks for the best prepaid phone plans. While prepaid cards look a lot like traditional credit cards or debit cards—and many credit card issuers, like Visa, American Express and Mastercard, offer them—the similarities end there.

However, there are other options that are specifically designed for people with bad credit or no credit at all. Prepaid cards and debit cards can both be used to make purchases, but the best choice for you depends on what you want to get out of the card. No matter which debit card you have, you can track how much money you deposit and withdraw each month by looking at your monthly statements. Debit cards might not help your credit, but they can help you create a budget. Prepaid cards and debit cards are both widely accepted at merchants worldwide, but one is preloaded and the other is not. In an effort to differentiate the prepaid from post-paid service for their customers, CSPs have branded prepaid services differently from the post-paid services.

Secured credit cards are credit cards that require a cash deposit as collateral. Your credit limit is often equal to the amount of the initial deposit. Consumers with poor credit tend to lean toward secured credit cards because they give consumers the opportunity to build credit by practicing good credit habits.