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Question:


What’s your take on prepaid debit cards? Good? Not so good?
-LolaRenee


Answer:


I’m not sure what the point of them is, other than to earn fees for the cards’ providers. The debit card that your bank gives you for nothing is a prepaid debit card, right? You can only spend the money that’s already in the account that the card is tied to. Some excessively cautious people concerned about fraud may like the idea of a card that’s not connected to a bank account, but fraud protections on conventional debit cards are just fine. One reason that you might want one is to teach children the value of money. Giving your child a debit card tied to your account is a technologically sophisticated way of writing a blank check. A card loaded with an amount of your choosing would be a prudent alternative. But if it’s a financial life lesson you’re after, make sure the kid pays the fee.
-Conrad de Aenlle



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